going to hike in june. they have tried to detach themselves from the to meeting constriction they set out last year. >> let's go to peter cook with the fed decision and statement. good afternoon. >> patient is gone. the fed is dropping its pledge to remain patient. at the same time, their forecast for interest rates going forward show the pacing seems to be scaled back. somewhat a mixed message. consistent with its previous statement, the committee judges an increase in the target range for the federal funds rate remains unlikely at the april fomc meeting. the committee of his space it will be appropriate to rage -- raise the rate when it sees further improvement in the labor market and is confident that

inflation will race back to its objective. this does not indicate that the committee has decided on the timing. june is not a lock. there is additional language here. the economic language suggests the fed has seen this operative recently. that's this -- has seen this soccer data recently. -- softer data recently. resources continues to diminish. household spending is rising moderately. business specs -- business fixed -- inflation has the client -- declined.

market-based measures of inflation compensation remain low. longer-term inflation expectations remain stable. inflation is anticipated to remain near its recent low level in the near term. the committee expect inflation to rise gradually over the medium-term. the transitory effects of -- the committee continues to monitor inflation develop its closely. the vote here was unanimous by members of the fomc. the interest rate projections included at this meeting. they do that quarterly. the fed is -- they have scaled back their forecast for rate increases going forward. 15 of 17 policymakers think the first increase will happen this year. to believe that will happen in 2016.

a big drop from the 1.125% we saw in december. 13 of 17 policymakers have the rates under what percent by the end of the year. this under -- rates under 1% by the end of the year. some of the economic projections for growth, unemployment and inflation come all of them coming down. gdp change 2.3-two .7%. 2016, 2.3-2 .7%. they have acknowledged the improvement in the unemployment rate and inflation 2015 at 0.6%.

core pc yetat 1.4%. somewhat of a mixed message. they are ready to raise interest rate but are not telling us when. mark: you are cooked joining us. -- peter cook joining us. we are seeing a big turnaround on wall street. scarlet fu has that part of the story. scarlet fu: those are u.s. stock indexes. this big leg higher build a long as peter kept reading the headlines. we are coming down a little bit here. the dow industrials getting .4% and the nasdaq advancing .3%.

the dollar extended its weakness with the euro popping 210 726 -- oil and gold paring their losses. they have come off their lows. treasuries are higher. the two-year yield currently at 50 basis points at the moment. the 10 year yield also coming down to its session lows. >> let us get back to our fed learn table -- roundtable. constance hunter, sebastian and lisa abramowitz. the headline as peter cook told us, patients language has been dropped. >> they are going to be patient and they told you they will be

patient by what they tell you they are watching for. they will watch for signs of falling inflation is not transitory and they will watch for signs that we get continued quality of improvement in the labor market. >> how is the dollar reacting sebastian? >> weakened a lot. the market is aggressive. fx is a higher volatility asset class. it has over anticipated and will continue to do so. over the next few days come with going to happen is people need to move back into the dollar. short-term is dollar down and equities up. >> lisa abramowitz has been pouring over how the bond market

is reacting. >> the two-year yields dropped the most since january 30, 2015. not that far ago. people are ratcheting back their expectations for when and how much the fed will hike interestingly if you look at futures trading, it does look like people are increasing the probability or their bets on the probability that the fed will hike in june. not a huge move, but people seem to be saying yes, it is dovish. it will be measured pace. it still looks like june is on the table. >> you expressed some surprise when peter used the word "unanimous" about this. >> an interesting shift. we have a more dovish composition of voters. even some of the more hawkish members have gotten on board here.

that is very interesting. i suspect -- i have my suspicions about who is voting yes that was putting no before. it is a good development. helpful for the markets that the fed is unanimous. >> what are they actually saying here? they are saying, look we will keep everything on the table keep looking at everything. what are they actually saying? >> what they are saying does not matter as much as what they want you to do. they want to stop strengthening because they see it as a potential threat over the long-term. they see the potential for too much tightening over the short term and they don't have to hike very fast. >> i have to pose a question to the panel.

is the pendulum swinging towards inflation? >> this depends on how it plays out with oil prices. we were having this debate during the break. we were just looking at a falling oil prices. why have oil prices fallen? we had a supply shock and a demand fall from the rest of the world. the reason oil prices are low is not because we have low demand in the u.s. and not because we are experiencing problems in our demand. that should eventually translate into higher prices. people will have more disposable income to spend on those other things. >> the price of oil, does the fed be this is a problem for the overall economy? >> they probably see it as a good shock. it is a hit to a local sector in the u.s. i don't think it is anything

bad. it is a pass of transfer of wealth from the rest of the world to the u.s. >> the bond market, people are making this company sold a record amount of debt recently who will have trouble refined to test have trouble refinancing -- will have trouble refinancing. >> we will be right back. ♪

mark: welcome back to "bottom line" special coverage of the fed's decision today.

repeating our top story, the federal reserve has dropped assurance it will be "patient" in raising interest rates. and again air in its communications policy and opening the door for higher borrowing costs as early as june. we will bring you janet yellen's news conference in 15 minutes. let's get back to our fed roundtable. joining me this afternoon, constance hunter sebastian gailey and lisa abramowitz standing by with wall street's reaction, scarlet fu. what more reaction are we seeing on wall street from this latest news? scarlet: we are holding on to our gains. you can see on the chart behind me, following the fomc announcement we have continued

to build on our advances. at the best levels of the session. it is pretty much across the board. the only sector not participating its consumer staples. lisa just mentioned the higher rates in the credit market. maybe a rush to refinance debt as well. for equities it would increase the cost of share buybacks for companies that tap the credit market in order to get cash to buy back their stocks. which could mean less ability for companies to boost their earnings-per-share number. in the slow-growing economy, there is struggle to grow revenue. companies were able to engineer their eps by cutting costs and boosting their earnings-per-share through the effective share buybacks, which reduces the number of shares you need to boost that earnings number. mark: scarlet, thank you so much. let's get back to our roundtable.

what we are seeing is a drawback from the most aggressive states in the 100 year history of the u.s. federal reserve. what is the historic context of this? what does this mean going forward? constance: in terms of the withdrawing of the quantitative easing? for our emerging markets, there is a big effect. we have had a huge amount of debt issuance over the past four years. andy 7 trillion -- 9.7 trillion. we have a big dollar debt issue around the world. the value of the dollar continues to increase. repaying that debt becomes more difficult. a lot of these copies have dollar revenues but it's something where that could be a concern for emerging markets. you will see higher rates in emerging markets.

mark: how much of a concern? sebastian: this question of dollar to thdebt, it is more of a question of refinancing. liquidity is like the sea and the sea is pulling itself out of the rest of the world into the u.s. the u.s. is basking in liquidity coming from everywhere else. that is being retrieved from emerging markets. yields have to back up and be higher. what they're doing is letting their -- lisa: the fed is putting june on the table. there has been a reversal because it looks like people are pushing back their expectations for rate hikes. a 10% chance of june. it underscores how they are paving the way for a june rate hike and yet their words are

dovish enough, is being interpreted as them taking it off the table. or being less committed to a june rate hike. they are more tempered in their discussion of the economy. they're clearly concerned about emerging markets. it comes back to us. how much can the u.s. keep growing when the rest of the world is slowing so much? constance: we only get 12% of our economy from trade. we can keep growing pretty strongly while the rest of the world is slowing. not that there is not feedback loops but we are definitely less affected by trade. constance: go usa. i completely agree. don't underestimate the u.s. a lot of liquidity arriving here, so we lower oil prices.

mark: when we return, janet yellen's news conference at 2:30 p.m. washington time. ♪

mark: welcome back to "bottom line" special coverage of the fed decision on this wednesday march 18. my colleague, scarlet fu is standing by once again at the breaking news desk. scarlet: dow industrials posting another triple budget point move to the upside at what her 45

points -- 145 points. the dollar continues sinking and its session low versus the euro and the yen. by taking the word "patience" out, it suggests we are going back to watching every data point to guess when the next rate increase will come. my question is does good economic data mean the kleins inequities -- declines in equities or does good economic data support higher share prices because it reflects a stronger economy? this will be determined in the months and weeks to come. mark: what does it mean? constance: the fed is looking to take the air out of the balloon slowly. they don't want to pop it.

they are also saying we will not do this until we know the engine is really firing on all cylinders. there is a good chance that we will see strong earnings growth in many sectors as the result of a relatively strong economy. there are many copies that benefit from having a low oil price. that will be an added boost to earnings. mark: the chief economist in chicago told the associated press the fed wants to prepare the markets for change but added "they don't want to scare them." our investors nervous right now? sebastian: they are incorrectly so. look at what qe has done, you buy hope for the future and hopefully deliver that through economic growth.

as the cycle slows down potential earnings growth has slowed down in the dollar cost increases, it becomes more of a difficult story. you have the wealth effect and the other side the substitution effect which is interest rates. if interest rates move too hard the entire system collapses on itself. there try to determine the volatility in interest rates so that the entire system does not self-defeating self. lisa: this is one explanation for why the two-year is rallying so much. the federal reserve, their median estimate they lowered it for the end of the year 20.65% down from 1.125% in december forecasts. -- end of the year to 0.26%.

mark: just quickly before we end this segment, when is the rate hike going to happen? in june? constance: it is data dependent. we will see a week first quarter. -- weak first-quarter. it will depend on the data. i'm split between june and september. sebastian: the fed did exactly what we are expecting and we are still calling for a june rate hike. watch for the labor to. -- labor data. mark: thank you all so much. when we return, we will bring you janet yellen's news conference. "bottom line" continues in just a moment. ♪

mark: welcome back to our special coverage of the fed's decision on interest rates. thank you for staying with us. the federal reserve dropping the word "patient" opening the door for higher bar when costs as early as june. the chair of the u.s. federal reserve said to address reporters in washington. let's go there live. janet: good afternoon. the federal open market committee did so afternoon -- this afternoon reaffirmed the current target range to the

federal funds rate. we also updated our forward guidance, indicating an increase in the target range for the federal funds rate remains unlikely at our next meeting in april. with continued improvement in the economic conditions we do not want to rule out the possibility that an increase in the target range could be warranted at subsequent meetings. let me emphasize that the timing of the initial increase in the target range will depend on the committee's assessment of incoming information. today's modification of our guidance should not be interpreted to mean that we have decided on the timing of that increase. in other words, just because we remove the word "patient" from the statement doesn't mean we

are going to be impatient. moreover, even after the initial increase in the target funds rate, our policy is likely to remain highly accommodative to support continued progress towards our objectives of maximum employment and 2% inflation. i will come back to today's policy decisions in a few moments but first i would like to review economic developments and the outlook which formed the policy for our decisions. we have c seen continued progress. the pace of employment growth has remained strong. with job gains averaging nearly 290,000 per month over the past three months. the unemployment rate was 5.5% in february. that is 3/10 lower than the

latest reading available at the time of our december meeting. broader measures of junk market conditions such as those counting individuals who want and are available to work but are not actively searched recently and people working part-time but would rather work full-time have shown similar improvement. as we noted in our statement slack in the labor market continues to diminish. meanwhile, the labor force participation rate the percentage of working age americans working or seeking work is lower than most estimates of its trend. wage growth remains sluggish suggesting some cyclical weakness persists. so considerable progress clearly has been achieved but room for

further improvement in the labor market continues. we continue to expect sufficient underlying strength in economic growth to support ongoing improvement in the labor market. after averaging 2.5% over 2014 growth of real gross domestic product it seems to have slowed. in part reflecting a moderation in household spending. in addition, the recovery in the housing sector remains subdued and export growth looks to have weeakened. we continue to expect moderate gdp growth with lower energy prices and modest job gains. inflation has declined further below are longer run objective.

largely reflecting the lower energy prices i just mentioned. declining import prices also restrained inflation. in light of the recent depreciation of the dollar will likely to do so in the months ahead. my colleagues and i continue to expect the effects of these transitory factors dissipate and as the labor market improves further, inflation will move gradually back toward our 2% objective over the medium-term. in making this forecast, we are attentive to the low levels of market-based measures of inflation compensation. in contrast, survey-based measures have remained stable. the committee will continue to monitor inflation developments carefully. this assessment of the outlook is reflected in the individual

economic projections submitted to this meeting by the fomc participants. as always, each participants projections are conditioned on his or her own view of appropriate monetary policy. the unemployment rate projections over the next few years and in the longer run are generally a bit lower than the december -- than the december projections. the central tendency for the unemployment rate stands at five-five .2% -- 5-5 .2%. committee participants see the participation rate declining little further over the course of 2016 and 2017. for economic growth participants generally reduce their projections since december

with many citing a weaker outlook for net exports. nonetheless, the central tendency of growth projections for this year and next remains somewhat above estimates of the longer run normal growth rate. finally, fomc participants project inflation to be quite low in this year. largely reflecting lower energy and import prices. the central tendency of the inflation projections for this year is now below 1%. down noticeably since december. as the transitory factors holding down inflation -- rebalance to 1.7-1 .9% next year and rises to 1.9-2 percent in 2017. returning to monetary policy, as i noted at the outset, the committee reaffirmed its view that the current zero-.25%

target range remains appropriate. with economic conditions improving and further improvements expected in the months ahead, we begin modify -- we have again modified our forward guidance. in december and january, the committee judged it could be patient and beginning to normalize the stance of monetary policy. that meant we concerted desk considered it unlikely that economic conditions would warrant an increase in the target range for the federal funds rate for at least the next couple of left lung meetings. -- at the went to meetings. while it remains the case that we see it unlikely that conditions will warrant a new increase in the target range at the april meeting, such an increase could be warranted at any later meeting depending on how the economy evolves.

today's modification of the forward guidance should not be read as indicating that the committee has decided on the timing of the initial increase in the target range for the federal funds rate. this change does not mean an increase will necessarily occur in june. although we cannot rule that out. as we noted in our statement the decision to raise the target range will depend on our assessment of realized and expected progress toward our objectives of maximum employment and 2% inflation. we continue to base that assessment on a wide range of information, including measures of labor market conditions indicators of inflation pressures and inflation expectations and readings on financial and international developers. best development.

it will be appropriate to raise the target range for the federal funds rate when the committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium-term. once we begin to remove policy accommodation, we continue to expect that even after employment and inflation are near mandate consistent levels of economic conditions may for some time warned the keeping -- warrant keeping the rate -- this guidance is consistent with the paths for appropriate policy reported by fomc participants. compared with the projections made in december, most participants lowered their path

consistent with the downward revisions made to the projections for gdp growth and inflation as well as somewhat lower estimates of the longer run normal employment rate. the median projection is just below 2% in late 2016 and rises a bit about 3% in late 2017. the medium projected rate in 2017 remains below the 3.75% projected by most participants as the rates longer length -- longer run valley. -- longer run value. the central tendency for inflation is close to our 2% objective. participants provide a number of

explanations. these include the residual effects of the financial crisis which are likely to continue to constrain spending and credit availability for some time. i would like to emphasize that these forecasts are conditional on participants' individual projectionss and other factors. our actual policy actions overtime will be data dependent. accordingly, as >>if expansion continues to be more vigorous than anticipated, the appropriate path would likely follow a steeper entire trajectory. if conditions were to prove weaker, the appropriate trajectory would be lower and

less steep. finally, the committee will continue with policy of reinvesting proceeds -- the committee's sizable holdings of longer-term securities should help maintain accommodative financial conditions and promote further progress toward our objectives. thank you. i would be happy to take your questions. peter:>> there has been this consistent reference to expectations of above trend growth. we have seen growth downgraded in the context of explicit references to external conditions. doesn't this indicate that the fed is facing a tougher time

going it alone decoupling from the rest of the world than you expected last fall? mark: it looks like from incoming data pertaining to the first quarter that real gdp growth has declined somewhat below where it was for the last several quarters of last year. that is really why the committee indicated that growth is moderated somewhat. there has been a slight downgrading of estimates of growth for this year. you have mentioned the dollar. we noted that export growth is weekend -- has weakened. the strength of the dollar also reflects the strength of the u.s. economy.

the strength of the dollar is also one factor that is holding down import prices and pushing inflation down. we are taking account of international developments including prospects for growth in our trade partners in making the forecast we have here. nevertheless, it is important to recognize that this is not a week forecast -- weak forecast. we continue to project above trend growth. we continue to project improvement in the labor market. the central tendency of the participants is they are looking for an unemployment rate that will be down which is

consistent with their estimates of its longer run normal value. we do see considerable underlying strength in the u.s. economy. in spite of what looks like a weaker first-quarter, we are projecting good performance for the economy. >> the policy statement today talks about one of the prerequisites you need to start raising rates. to be reasonably confident that inflation targets will be met at 2%. that is coming out at a time when you have lowered your forecast on inflation. which i would think would make you less confident about it. what is it going to take to make you reasonably confident? janet: i do not have a mechanical answer for you. there is no single thing we must

see such and such an order to achieve that local of confidence -- level of confidence. we will be looking at a wide array of data. we have said that we also want to see considerable continued improvement in the labor market and a stronger labor market with less slack is one factor that would tend to increase my confidence that as slack diminishes, inflation will move up overtime. other things i will be looking at, the inflation data. we expect inflation to remain quite low because of the depressing influence of energy price declines and the dollar. we will be looking at the inflation data carefully to see if we can interpret low levels

of inflation if we see that, which we expect. we will be looking at wage growth. we have not seen wage growth pick up. we may not see wage growth pick up. if we did see wage growth pick up that would be a symptom that inflation would likely move up overtime. we will be watching inflation expectations. survey majors -- measures have been stable. we will be watching it carefully. market-based measures of inflation compensation have fallen near low. if they were to move up overtime , that would serve to increase my confidence. there are a wide range of things we will be looking at including

further improvement in the labor market. there is no simple answer. this is a judgment the committee will have to make. >> chair yellen, the famous. plot we talk about showed officials expectations for interest rates will end in 2016 have come down fairly notably. i wonder if you could explain to us your analysis of why those estimates are coming down. is it a reflection of what has changed -- is it a reflection of the changes in the fed's economic forecast or a change in the way the fed is reacting to the economy. janet: it is always hard to know exactly why each participant has

written down the forecast they have. certainly, there are changes in the assessments of the economy and forecasts for the economy that would point in the direction of downward adjustment in the funds rate path. you do see meaningful downward adjustment in the inflation forecast. in addition, importantly a number of participants have marked down their estimates of the normal longer run unemployment rate. that range has moved down noticeably from previously -- it has moved down to 5-5.2.

it suggests participants are seeing more slack in the economy now than they previously did. i think both of those things would point to downward revision in the funds rate path. >> the experience of some other central banks japan sweden suggests tightening early can be a risky process. it can dramatically outweigh the risks of leaving things a little longer. i wonder if you could comment on that international experience and explain how that is influencing the debate in the of mc -- in the fomc. janet: when an economy is operating at a zero lower bound it creates a situation where there are asymmetric risks.

it is possible that the economy proves stronger than expected to respond to that by tightening policy if there are adverse shocks to demand that tend to push inflation and economic performance in an adverse direction, it is not possible to lower rates. that is a reason why for a number of years we engaged in asset purchase programs. there is a situation there of asymmetric risks. it does point in the direction of waiting longer to raise rates. this is an influence we have long been aware of and have been taking into account. so that it is not something that comes into play now.

it is a reason we have held rates at 0-.2 5% for roughly six years. we are seeing an economy growing above trend. the labor market is improving. some of the headwinds that have long been holding the economy back are beginning to recede, which is reason that the committee wants to be able to evaluate incoming data and consider when it may be appropriate to finally raise rates. that is a consideration we have long taken into account. >> i don't hear any quantitative measures of what increasing confidence or heading back to or further improving and the job market, which is unusual for a

fed that was providing us metrics on unemployment. is it now policy to keep the market guessing? could you see raising rates while the committee still judges that the risks are balanced? janet: in terms of certainty and providing metrics we provided a metric or threshold of 6.5% several years ago and told market participants and the public that we would not consider it appropriate to raise rates as long as the unemployment rate was higher than that level. as long as inflation was well contained.

our policy needs to be data dependent. we need to respond to incoming data and our assessment of incoming data in terms of where we think the economy is heading and how close we are to our objectives. can we provide certainty? of course we cannot provide certainty because we are not certain what the data will look like and how the economy will involve. to achieve our objectives, we need to watch the data continually reformulate our best guesses or forecast of where the economy is going and respond appropriately. we cannot provide certainty and should not provide certainty because economic developments that will unfold are uncertain.

what market participants should be doing is looking at incoming data just as we are informing their expectations or where -- four where policy should be going just exactly as we will be doing by attempting to understand economic developments as they unfold. that is what we are trying to say in this statement. we don't want and don't think it is appropriate at this point to provide calendar-based guidance. >> [indiscernible] could you be raising rates in that context? janet: we said the risk to the outlook are balanced. certainly, we could raise rates

in a situation where the risks are balanced. we need to see -- we want to see further improvement in the labor market. we want to feel reasonably confident that the economy is on a trajectory where we will achieve our 2% objective. >> there seems to be an awful lot riding on surveys of inflation expectations. yet, those surveys are an imprecise instrument. the don't seem to differentiate between 1.5 and two can you talk about why the fomc has confidence those measures are where inflation is likely to go and whether the concerns you've articulated about the market-based measures correspond to concerns you may have about survey-based measures?

janet: survey-based measures are not perfect. the median of those measures does not line up very well with actual inflation. they seem to be biased. nevertheless, they do seem to be useful in predicting actual movements and inflation. because we think inflation expectations are a determinant of price setting we need to be looking at the best data we can, even if it's imperfect in trying to gauge inflation expectations. we do look at survey measures. the fact that survey measures are stable unit they are stable at levels consistent with the inflation objectives the central bank was to achieve, that is not a guarantee that inflation will

over time moved to be consistent with those expectations. an example is japan, where for many years the households and businesses expected positive inflation but there was a consistent undershoot. this is not a single metric that is perfect but one of many things we look at. we also look at measures of inflation expectations based on market differentials between nominal or tips yields. they are informative. but they can move around for reasons pertaining to liquidity in the treasury market and the tips market and because of changing perceptions of inflation risk. they are not a cure read either.

we want to look at both things and not take away any simple -- >> chair yellen i want to check in with you on whether you have any concerns about levels in the financial inequity markets. -- bubbles in the financial by some conventional measures, are somewhat higher than historical levels. some sectors continued to pair stretched -- two of your stressed. the report specifically mentioned biotech and social media stocks as being substantially stretched. do you still feel that way and can you comment on bubbles and

particular