focused on. the dow is up 162 points right now. >> the note at 2.12%. crude up by 2.6%. let's get to steve liesman with the fed decision. >> considerable time remaining in the statement but only as a reference. it is not the policy. they are changing this language to say that the committee judges can be patient. they go on to say that they can be -- that this statement of being patient is consistent with the old phrase considerable time. so it is in there but they are saying that it is changing. the committee maintained the rate unchanged at 0 to 0.25%. there were three dissents, one from the dove side saying he thinks the decision creates risk

to the credibility of the fed's 2% inflation. two from the hawk side, the economic improvement in his opinion since october has moved up from when the fed needs to hike rates. as for the characterization of the economy they say it continues to expand at a moderate pace but did reduce the time or upgrade the amount of labor in the economy saying it improved further and the under utilization continues to diminish. a little bit of movement there. on inflation some mention of energy saying it continues to move below the long run objective partly reflecting the decline in energy prices. the risks they say are nearly balanced same as before. they expect inflation to move back down towards the 2% level as the labor market improves and the transitory effects of lower energy prices and other factors

dissipate. a new comment is that the committee continues to monitor inflation developments closely. so that is a big issue for them. and then finally a change in the very slight change in the forecast or average or median forecast rates for the fed down a little bit across the board. 1.25 in 2015 down about 0.2 for 2016 and the new long-run rate is 3.75 about what it was previously. this is like an interim kind of what do you want to call it waiting room step for getting rid of considerable time. they said with the new language is that the committee judges it can be patient consistent with considerable time. did they keep considerable time the way it says over there? i don't know. it kind of is out but it is also still literally in the statement. >> all i know is right now i

need a fed thecersaurus and an advil. >> lindsay, you pretty much nailed it. you just said moments ago that the fed may drop considerable time and put in the word patient. we are trying to decide if considerable time is used in the way that considerable time has been used considerable times. >> this is exactly what the fed needed to do. they are able to maintain their commitment to accommodation for a considerable time. it removes the market's obsession over the two little words but keeping the same intention in the policy. it was a smooth transition away from those two little words to a policy intention that implies the exact same thing. >> i'm not sure i agree. i think there is more confusion

here. in other words, if one word is consistent with the other why did you change it in the first place? is there something that is different about it? i think there may be a leadership question here. if yellen wants to get rid of considerable time it should have happened. that question about if there is a half way house for the word or phrase considerable time. >> are we sure they used the word patient as an adjective and not a noun. >> pathway to more benign language. we moved from considerable time to patient. maybe they change language to for a significant period slowly weaning us towards the idea that eventually rate increases will come but they want the market to remain calm, that we are not there yet. >> let's take a look at the reaction here. we can bring up the three way board we are seeing significant gains not just little digest this kind of thing.

it's really moving high. the dow is up by 247 points. going into the decision up by about 149. how does the stock market take what the fed just said? >> i'm sure the stock market will like it because the stock market seems to be addicted to very low interest rates. this isn't just adding confusion. they had a template back from 2004 which they could have used. all they had to do was remove the phrase considerable period of time. by having both phrases in there now we don't know what it means and next time we will wonder will they remove considerable period again? i think there is a lot of dissent in the fed and i think they are confusing things and i think it is important for the fed to be clearer here. the fed is way behind the game here. we have 0 interest rates, the unemployment rate is below long-term average. economy is growing relatively rapidly. everybody wants to have a soft

landing. we are at 30,000 feet a mile away from the run way here. >> let's get bob dole here. we're poking a little fun at the language because we have been critical on this program of the obsession the market has with words. why do we care so much about the words considerable or patient or whatever it may be. we know the fed is likely to raise rates mid next year. we need to start positioning our portfolios now for this event which will occur at some point. so what do we do? >> we have 3% real growth. we are approaching 5% nominal. it is inconsistent with 0 short term interest rates. the fed has to get on with it. i think it tells you you want to own risk assets. equities are a good place to be. lean to the cyclical side. the economy is doing okay. it is clear the fed is confused

because it is transition time. they are the hardest times for fed. they will get there but it is bumpy. >> it feels the market is pricing in the first-rate hike in 2015, next year. but what would have to happen in the world economy or markets whether oil markets or in china or russia or elsewhere, what would have to happen for the market to start pricing in 2016 rate hike instead? >> i think we might be pricing that in after we hear what janet yellen tells us in the press conference. it is clear from the statement that the fed although we have seen back-to-back quarters of growth and impressive increases month to month it is clear the fed is focused on underlying details which show significant amount of slack in the labor market. with the disinflationary environment it means the fed is not poised to raise rates that we are not going to see that until 2016. we are focusing on the three dissents all of which do not

have a vote next year. remember, we are shifting the voting members in terms of the federal reserve presidents all of which are going to be a much more dovish lean with just one hawk having a vote next year. >> who was that that said wow in the background in reference to? >> i thought lindsay's comment, means she think patient is more patient than considerable time was. it is that confusion. >> i believe the fed is not going to raise rates until 2016 even with considerable time, patient, considerable time, 2016. >> david kelly, in journalism we tend to see if somebody has a vague answer it means they don't know the answer or trying to dodge you. the longer the fed remains vague to me says they don't understand the economy themselves or trying to -- i am growing distrustful

of them. >> looking at statements in 2004 they were short and crisp. this statement is longer and longer and getting more confusing. they have to recognize. i understand that oil prices are down and that looks like deflationary. this is going to -- it is like a huge tax cut to the american consumer. we are using it rapidly. this policy is too aggressive given the state of the economy. it's sad because i know how this expansion is going to end. it is going to end with a typical fed boom bust because they just don't have the guts really and the understanding to move policy when they really should and that is right now. >> to help us understand what is going on is there any chance and i know the fed is being accused of overcommunicating and that can be kind of confusing when everyone is voting on this.

is there a chance next year that we will get a news conference every month as opposed to every other month which would move it more in line with what the ecb does? >> that's a great question. and the reason is because i think there is some sense that the fed that they don't want to be automatic about when they raise rates. the trouble is let's say they skip the meeting with the press conference then they may have to wait until the next press conference comes around to make a change. there is some possibility and some discussion about a press conference every meeting. no decision has been made as far as i know about that. that would be key. i think one thing out there to david kelly's point is that i think they want to be extra cautious on inflation. look at the language on inflation they add this line that they watch it very closely which is language they had previously but not in the most recent statement. that says low inflation is now on their radar and they want to make sure that energy is

transitory. that would be the key to when they might want to raise rates. they did upgrade the labor outlook here. >> i think they should watch wage inflation but should ignore energy inflation because that is outside the u.s. economy and not about things they control. >> there is no wage inflation. >> i get that. and i agree that we haven't seen much wage inflation yet. i think it is fair for them to wait. economic relationships suggest as unemployment rate comes down towards 5% as i think it will be by this time next year you will have more wage inflation and they can't afford to wait and see before they move from this extremely accommodative policy. >> do you raise your s&p or dow jones industrial average forecast for inenext year becau of this relatively soft language? >> the economy is doing its own thing. it's doing well and david is right. the 0 -- we got to 0 because we

had an emergency. the emergency is clearly gone. they have to get on with it. it is going to be too late if they wait. >> thank you very much to all of you for joining us today. you have a big move to the upside in the equity markets. let's take a look at what the dow is up to 263 points to the upside. 150 points higher going into the decision. the ten-year note moved up ever so slightly. yield at 2.12. not a huge amount of movement there. the dollar is marginally higher at 88 right now. let's get to our market reporters. bob pisani and rick santelli in chicago. looks like the stock market is liking what they heard. >> look at the s&p. we moved up eight, nine handles on the s&p on this news. the key one as you heard from steve there the fed can be patient and beginning to normalize the stance of monetary policy. a great move there they kept the considerable time in there.

that's only one of several things i was watching. on the first paragraph on the economic commentary i continue to see comments that the economy is improving, under utilization of labor resources continues to diminish. third thing, did they say anything about foreign risks or try to introduce that or concerns about what is going on overseas? saw nothing at all in that. fourth one is comments on the inflation. it was interesting to see them call the effects of lower oil prices transitory in nature. look what we have here. they are patient. the economy is clearly improving. they don't have comment on foreign risk. energy drops transitory. we have long-term rates remaining low for a long time or at least a while. it is a little wonder that the stock market likes this kind of news. it is a little confusing to some people the stock market is reading this very positively.

>> before we get to risk we have a lot of smart viewers and listeners to cnbc on this program. somebody on twitter brought up an interesting point. is there any chance at all -- for our viewers who don't know how this works a lot of traders quickly scan, a computer scans language and makes a trade based on what the computer reads. is there a chance the fed left that in so that it would be read by the traders but yet the context is different? >> no. are you asking me the question has the fed crafted a statement to confuse high speed traders? >> yes. >> no. i don't think so. >> it was a good question. >> i think we should take the federal reserve statement at its word. they are obviously trying to indicate that there has not been a dramatic change in their stance but they want to shift it ever so slightly. that is the obvious explanation and we should leave it at that. >> try to find a little

conspiracy action. >> good try. >> rick santelli, let's go to you. what do you make of this patience to considerable time and back again? >> down here we call it the rumba. i'm not going to go into the statement. after 2 1/2 years i love the way you described it. if this was an essay test to an entity who controls $4.5 trillion and this is their answer, i rest my case. let's go to the markets. we can put some meat on the bone up $39 index. as you see the chart it was all over the place. what was fascinating was how crude oil was following that dollar like nobody's business. look at the crude oil following dollar index up. it is up 128. in terms of fives, tens and 30s

it was all about the yield curve. you saw most volatility. out of left field you saw the 30 years breaking from the pack. let me set it up. we are at 1.58 before the statement. we were at 2.11 for 10s. the 30s are approaching 2.75 which means they steepened and the whole curve has steepened somewhat to the 30 year. the bulk of what everybody looks on the curve is the five years is still pretty darn flat when you look at all of the other book ends to the yield curve. i guess the long and short of it is the dow is up 276. that is the only thing remotely logical about what the fed is trying to accomplish. >> don't always try to look for logic you will be severely disappointed. thank you. coming up on this fed special "street signs" we get more valuable insight.

pimco's joins us with his reaction. >> we are going to bring you janet yellen news conference live with this special edition of "street signs" when we continue. (trader vo) i search. i research. i dig. and dig some more. because, for me, the challenge of the search... is almost as exciting as the thrill of the find. (announcer) at scottrade, we share your passion for trading. that's why we rebuilt scottrade elite from the ground up - including a proprietary momentum indicator that makes researching sectors and industries even easier. because at scottrade, our passion is to power yours.

fed chairman janet yellen giving her final news conference of the year in about ten minutes time. joining us now scott.

let's talk about the federal reserve. people are giving us the business for analyzing word for word. i get it. i'm sick of it, too. how much do you trust the fed's projections or do you have to just go along with what they say because that will move the yield curve anyway? >> certainly the market is not entirely listening to what the fed is saying. if you look at the pricing at the front end of the yield curve the market thinks the fed will be on hold and going at a much slower pace than the fed's blue dots would tell you they are going. the fed itself when you look back historically over the last several years has been optimistic about their growth and outlook for the economy. so i think that is what is making them a bit reluctant so they are tip towieing towards t liftoff. whether it happens at the beginning of summer or end of summer that is most likely case.

that is not the most important thing. ultimately where financial prices are going it matters what is the fed's reaction function and path of normalization and where do they end up? that is where we are focused on our neutral outlook. it will be very unlike prior hiking cycles. ultimately the destination of policy will probably be somewhere around neutral rate of 2.5%. >> when do you think it will start? what month and which year? >> i think the fed has been pretty clear if you look at messaging and comments of bill dudley and others. they think the summer, perhaps june, is appropriate. maybe it is later in the year. maybe it's end of summer. that's got to be the base case for when they lift off unless there is some dramatic change in the economic outlook. obviously people will beal very focused on inflation and headline inflation and it will be interesting to hear what the fed has to say about that and

how they are thinking about it. we know the drop in energy prices does two things, drops headline inflation while having little impact on core. to the extent that helps accelerate economic activity you can make a case it raises inflation much faster than otherwise. >> let me ask you a different question because this language, smart guy basically saying i'm as confused as ever because the considerable time and the patient. are you more or less clear on what the fed is thinking and what they will do today than one year ago? >> well, i think it's more clear now than what they were saying a year ago. they have talked about the sequencing, what they will do when they begin raising rates. they have basically outlined the timeframe. there is not huge surprises in today's message. i think it was always 50/50 whether they removed considerable time at this meeting or another one.

they removed the word patient. nothing is changed about the fundamental outlook other than the energy crisis. it is safe to say that is protcaused them to slow down. >> are you surprised that there was not more focus on foreign risk, offshore risk considering the things going on right now? >> not really. i'm sure it will be addressed in the press conference. the fed's mandate is domestic activity and setting monetary policy with that in mind. >> offshore effects domestic ultimately. >> it does but much less than many people think. it takes very large movements in foreign economic activity to have a real impact on the u.s. economy. so i think you see that in their forecast, as well. they acknowledge that despite the developments outside the united states they continue to have a very robust outlook for improvement in the labor market. that is ultimately one half of the fed's objective.

that is what they are focused on. >> the words russia, oil and europe were used 0 times in the statement today. it was a pleasure to get you on the program. don't be a stranger. >> thank you. have a good afternoon. >> we should say the pimco total return outflows were down 65% in november. so they are slowing down. . >> you are looking at a live picture inside the fed. we will bring it to you right after the break. we will carry the news conference live. stick with us.

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in about twoe minutes and 54 seconds we bring you the janet yellen news conference live. why don't we take a look at what the market is doing. there is a bit of confusion as to what the fed meant in a statement. the market is taking it as a positive. the dow up by 277 going into the statement up by 149. >> it is addition by lack of removal. they kept a phrase of some kind in there. it is fairly dovish. the market is up nearly 300 points. precious metals doing well.

three of the four are up. only palladium which nobody cares about anyway is down right now. to your point about energy crude oil up 76 cents to 56.69. maybe a floor being put on wti. >> absolutely amazing what is happeni happening. from the session low to the session high it was in a range of about 9%. crude is all over the shot. today it is moving higher and energy shares are largely responsible for the move in the market, as well. we are sitting at 56 and change. >> there is a big question about who and by how much some of the energy and oil companies are going to be impacted. we went to the bakkan in north dakota about a week and a half ago where it was about 20 degrees below 0. tonight i head to midland, texas. friday we do the show from an oil field there. which companies will be hurt the most?

which companies are at risk digging through balance sheets, income statement. it has been a lot of fun. also fed prep. texas, i'm coming for you, baby. >> let's bring up a board of the u.s. dollar. let's get you up to date with the stats you need to know about. the u.s. dollar has been all over the shot. rebounding on expectations the fed would signal rate hikes on track. sitting at 88.28 on the board. as for gold mentioning precious metals going into the decision today we are currently at 11.98. >> right now the six best performing stocks of the s&p 500 nabors, noble, noble energy, trans ocean, chesapeake energy and then whirlpool. top seven stocks in the s&p 500 right now are all oil related names. >> remember last week we were

asking a number of guests do you think it is time to go bargain hunting in the oil patch? if you bought an oil etf how much would you be in the money today? >> would have been good. fed ex second worst performer. they don't forecast but they cut their outlook to below what wall street had expected. the big red banner says we are waiting on janet yellen. >> we are waiting on janet yellen. we are looking at a live shot there waiting for her to come out. it was a historic decision today. here she comes. i was going to talk about cuba. let's go to yellen. good afternoon. the federal open market committee concluded its last meeting of the year earlier today. as indicated in our policy statement the fomc reaffirmed

its view that the current 0 to 0.25% target range for the funds rate remains appropriate. the committee also updated its forward guidance for the federal funds rate indicating that the committee judges that it can be patient in beginning to normalize the stance of monetary policy. this new language does not represent a change in our policy intentions and it's fully consistent with our previous guidance which stated that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the end for asset purchase program, but with that program having ended in october and the economy continuing to make progress towards our objectives the committee judged that some

modifications or guidance is appropriate at this time. i will have more to say about our policy decisions in a moment but first let me review recent economic developments in the outlook. in the labor market progress continues towards the fomc's objective of maximum employment. the pace of job growth has been strong recently with job gains averaging nearly 280,000 per month over the past three months. over the past 12 months job gains average nearly 230,000 per month. the unemployment rate was 5.8% in november, 0.3 lower than the lowest reading available at the time of the september fomc meeting. broader measures of labor market utilization have shown similar improvement. and the labor force participation rate is levelled out.

as noted in the fomc statement under utilization of labor resources continues to diminish. even so there is room for further improvement with too many people who want jobs being unable to find them, too many who are working part time but would prefer full-time work and too many who have given up searching for a job but would likely do so if the labor market were stronger. the committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labor market. real gdp looks to have increased robustly in the third quarter reflecting solid consumption and investment spending. smoothing through the quarterly ups and downs earlier this year real gdp expanded around 2.5% over the four quarters ending in the third quarter and the

available indicators suggest that economic growth is running at roughly that pace in the current quarter. the committee continues to expect a moderate pace of growth going forward. inflation has continued to run below the committee's 2% objective and the recent sizable declines in oil prices will likely hold down overall inflation in the near term. but it's the effects of these oil price declines and other transitory factors dissipate and as resource utilization continues to rise the committee expects inflation to move gradually back towards its objective. in making this forecast the committee is mindful of the recent declines in market-based measures of inflation compensation. at this point the committee views these movements as likely to prove transitory and survey

based measures of longer term inflation expectations have remained stable. that said, developments in this area obviously bear close watching. this outlook is reflected in the individual economic projections submitted in conjunction with this meeting by the fomc participants. as always each participate's projections are conditioned on his or her on view of appropriate monetary policy. the central tendency of the unemployment rate projections is slightly lower than in the september projections and now stands at 5.2% to 5.3% at the end of next year in line with its estimated longer run normal level. committee participants generally see the unemployment rate declining a little further over the course of 2016 and 2017.

the central tendency of the projections for real gdp growth is 2.3% to 2.4% for 2014, up a bit from the september projections. over the next three years the projections for real gdp growth run somewhat above the estimates of longer run normal growth. finally, although fomc participants project inflation in the near term to be lower on account of the decline in energy prices they continue to see inflation moving gradually back towards 2%. the central tendency of the inflation projections is 1.0% to 1.6% next year rising to 1.8% to 2% in 2017. as i noted earlier, the committee reaffirmed its view that the current 0% to 0.25%

range for federal funds rate remains appropriate. regarding forward guidance for federal funds rate our october statement indicated that it likely would be appropriate to maintain the current target range for the federal funds rate for a considerable time following the end of our asset purchase program especially if projected inflation continues to run below the committee's 2% longer run goal. today's statement which indicates that the committee judges that it can be patient in beginning to normalize the stance of monetary policy does not signify any change in the committee's policy intentions as set forth in its recent statements. as before this judgment is based on the committee's assessment of realized and expected progress towards its objectives of maximum employment and 2%

inflation. an assessment based on a wide range of information including measures of labor market conditions, indicators of inflation pressures and inflation expectations in readings on financial developments. given that the committee is not signaling a change in policy, why did we update our guidance? the reason is that with the asset purchase program having been wound down in october it seemed less helpful to continue to communicate about the possible timing of our first-rate increase with reference to an event that is receding into the past. instead, we have shifted to language that better reflects the committee's focus on the economic conditions that would make liftoff appropriate. employment is rising at a

healthy rate and the u.s. economy is strengthening reflecting in part a highly accommodative stance of monetary policy. of course, inflation has been running somewhat below our goal of 2%, but we project that gap to close gradually over time. as progress in achieving maximum employment and 2% inflation continues at some point it will become appropriate to begin reducing policy accommodation, but based on its current outlook the committee judges that it can be patient in doing so. in particular the committee considers it unlikely to begin the normalization process for at least the next couple of meetings. this assessment, of course, is completely data dependent. if incoming information indicates faster progress

towards the committee's employment and inflation objectives th s than the commit expects then increases in target range for federal funds rate are likely to occur sooner than anticipated. conversely if progress is slower than expected then increases in the target range are likely to occur later than currently anticipated. once we begin to remove policy accommodation it continues to be the committee's assessment that even after employment and inflation are near mandate consistent levels economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run. this guidance is consistent with the paths for appropriate policy given by fomc participants.

assuming that the economy evolves broadly in line with participants' expectations almost all participants believe it will be appropriate to begin raising target range for the federal funds rate in 2015. there are a range of views on the appropriate timing of liftoff within the year. in part reflecting differences in participants' expectations for how the economy will evolve. by the time of liftoff participants expect to see some farther decline in the unemployment rate and additional improvement in labor market conditions. they also expect core inflation to be running near current levels but foresee being reasonably confident in their expectation that inflation will move back towards our 2% longer run inflation objective over

time. of course, as i previously emphasized, the timing of the initial rise in the federal funds rate target as well as the path of the target thereafter are contingent on economic conditions. by late 2016 the median projections for the federal funds rate at 2.5% remains more than a percentage point below the longer run value of 3.75% or so projected by most participants even though the central tendency of the unemployment rate by that time is slightly below its estimated longer run value and the central tendency for inflation is close to 2% objective. fomc participants provide a number of explanations for the federal funds rate running below its normal level at that time.

in particular the residual effects of the financial crisis which are likely to continue to constrain household spending and constrain credit availability for some time. but as these factors dissipate further most participants expect the federal funds rate to move close to the longer run normal level by the end of 2017. finally, the committee will continue its policy of re-investing proceeds for maturing treasury securities and principle payments from holdings of agency debt and nbs. the committee's sizable holdings of longer term securities should help maintain accommodative financial conditions and promote further progress towards our objectives of maximum employment and inflation of 2%. thank you and i will be happy to

take your questions. >> chair yellen, a number of fed officials have projected in the lead up to this meeting that most likely timing for liftoff was around the middle of next year. i wonder if you could clarify that. you said in your statement that patient means not for at least two meetings. your forecast, the fomc forecast seems to be consistent with something like middle of the year liftoff. can you speak to that? and can you also speak to the down draft we are seeing in inflation now and in particular market based inflation expectations and whether that gives the committee any hesitance about proceeding towards liftoff in the months ahead? >> so i did say that the statement that the committee can

be patient should be interpreted as meaning that it is unlikely to begin the normalization process for at least the next couple of meetings. now, that doesn't point to any preset or predetermined time in which normalization will begin. there are a range of views on the committee. and it will be dependent on how incoming data bears on the progress the economy is making. first of all, i want to emphasize that no meeting is completely off the table in the sense that if we do see faster progress towards our objectives than we currently expect then it is possible that the process to normalization would occur sooner than we now anticipated and, of course, the converse is also

true. so at this point we think it unlikely that it will be appropriate that we will see conditions for at least the next couple of meetings, that we'll make it appropriate for us to decide to begin normalization. a number of committee participants have indicated that in their view conditions could be appropriate by the middle of next year, but there is no preset time and there are a range of views as to when the appropriate conditions will likely fall in place. so that's something we will be watching closely as the year unfolds. you asked, also, i think about inflation. and as i mentioned in my press statement especially with the downward pressures on inflation that we expect to see for a

little while because of declining oil prices and falling import prices. we certainly expect headline inflation to be under downward pressure for a while. as i mentioned, most participants do envision that conditions will be appropriate sometime during this coming year to begin normalizing policy. and they do largely expect that inflation will be core inflation will probably be running close to its current level. and headline inflation could even be lower. but what they will want to have is a feeling of reasonable confidence that when we start the process of normalizing policy that it will be moving up over time. of course, as labor market conditions continue to improve history suggests that as long as

inflation expectations remain well anchored that that is likely to occur. with the the associated press. given what is happening now with the transition with the fed, there seems to be a pattern developing that the market expects big news to come when you have a press conference and no news to come when you don't have one. but is that a good expectation and is there any thought to starting to have a press conference at every meeting? >> i would really like to discourage that expectation. every meeting that we have is a live meeting at which the committee could make a policy decision and we will feel free to do so. i would really like to strongly

discourage the expectation that policy moves can only occur when there is a scheduled press conference. and we have long had in place the ability to hold a press conference call rather than an in-person press conference and we did do so on a number of occasions in earlier years. so the committee clearly would want to be able to explain its reasoning as we begin the process of normalizing policy. every meeting is live and if we were to decide at a meeting to begin to normalize policy i expect we would hold a press conference call. >> was there concern expressed

at the meeting that the signal coming from markets and a variety of markets, lower oil prices, lower yields around the world was one of deflation and that risk was one that should perhaps concern about inflation on the other side? >> well, thanks, steve. we're very attentiatentative to developments and certainly discussed them in the meeting. the very substantial decline we have seen in oil prices is one of the most important developments shaping the global outlook. it will have different affects in different regions. and could well have affects on financial markets as we're seeing. i think the judgment of the committee is that from the standpoint of the united states and the u.s. outlook that the decline we have seen in oil prices is likely to be on net a

positive. it's something that's certainly good for families, for households. it's putting more money in their pockets. having to spend less on gas and energy and so in that sense it's like a tax cut that boosts their spending power. the united states remains, although our production of oil is increased dramatically, we still remain a net importer of oil. of course, there may be some offset in the form of reduced drilling activity and possibly some change, some reduction in cap x plans in the drilling area. but on balance, i would see these developments as positive for the standpoint of the u.s. economy. with respect to deflation, we

see downward pressure on headline inflation from declining energy prices. we certainly recognize that that is going to be pushing down headline inflation. and may even spill over to some extent to core inflation. but at this point, although we indicated we're monitoring inflation developments carefully, we see these developments as transitory and the committee continues to believe, especially with the improvement we're seeing in the labor market, which we expect to continue, that inflation will move back to 2% objective over time. as i indicated we will want to feel i believe that people will expect to feel reasonably confident about that when they -- when the process of normalization begins but we do expect them to be transitory. [ inaudible ] >> robin harding from the

financial times. madame chair, there's a big gap between the pace markets expect you to raise interest rates an enthe rates you have indicated in your plot. are markets misunderstanding your intentions? thank you. >> so, that's difficult for me to say. what i want to say is that our objective is to communicate as clearly as we possibly can about our plans and how we see the economic environment unfolding. when the participants in the committee fill out their projections, they're asked to give the path of the federal funds rate and of the various economic variables that they consider most likely. they're not asked to talk about all the different things that could happen, recognizing there is uncertainty, and the paths of

the funds rate that they would consider appropriate if those other alternatives were to happen. but other alternatives i think are priced into the market. and one reason that the market prices may be different than the committees is because they place probability on other outcomes that look different than what they regard as the model forecast. they may also have a different set of expectations about how the economic outlook and how it's likely to unfold. so i recognize that there are significant differences. i can't tell you exactly what they're due to but what i do want to do is communicate as clearly as i can on behalf of the committee how we think the economy's likely to progress and how we would likely set the federal funds rate over time if

that forecast bears out. >> doesn't make you uncomfortable where markets are now? >> there are a number of different factors that are bearing on the path of market interest rates. i think including global economic developments. it is often the case that when oil prices move down and the dollar appreciates that tends to put downward pressure on inflation compensation and on longer term rates. we also have safe haven flows that may be affecting longer term treasury yields. so i can't tell you exactly what is driving market developments but what i can say is we're trying to communicate our thoughts as clearly as we can. >> hi, steve muster of "the

washington post." i was just hoping you could go into a little more detail about the oil affect. even though you see it as transitory, does that give you room to keep the rates low for a few months and if prices bounce back what's that going to do to your ability to change rates and how might you react to that? >> well, i -- i'd say, you know, that i think that what we have seen since the mid-'80s is that in an environment where inflation expectations are well anchored that movements in oil and commodity prices and import prices tend to have transitory affects on the inflation outlook. there were many years in which we had unanticipated increases in oil prices. really beginning in 2004, 2005 that put upward pressure on

headline inflation and sometimes even spilled through into core. and typically, the committee looked through those impacts on inflation with a view that they would be transitory and i think experience bears out that they were transitory. and i think that's the committee's expectation here. inflation even core inflation has been running below our inflation objective. movements in oil, you know, now down and perhaps later up will move inflation around. certainly headline inflation. but the committee at this point anticipates those impacts to be transitory. so, as long as participants feel reasonably confident that the inflation projection is one where we expect to meet our 2% objective over time that's what

i think they'll be looking at things as we decide on the path for the funds rate. >> "the new york times." does a couple mean two? and when you talk about reasonable confidence in inflation expectations, can you elaborate a little bit about what it would take to give you reasonable confidence that inflation is headed back to 2%? >> so a couple, i believe the dictionary probably says a couple means two so a couple means two. and with respect to inflation -- our forecast for inflation and inflation expectations, let me start by saying i think it's important that monetary policy be forward looking. the lags in monetary policy are long and, therefore, the committee has to base its decisions on how to set the federal funds rate looking into

the future. theory is important. and theories that are consistent with historical evidence will be something that governs the thinking of many people around the table. typically, we've seen that as long as inflation expectations are well anchored that as the labor market recovers we'll gradually see upward pressure on both wages and prices. and that inflation will tend to move back toward 2%. i think historically we have seen as the economy strengthens and slack diminishes that inflation does tend to gradually rise over time. and just speaking for myself that i will be looking for

evidence that i think strengthens my confidence in that view and looking at the full range -- >> technical problem. we'll hopefully bring janet yellen back to you as soon as we can get that shot back up. of course, we have been watching the last live news conference of chairwoman janet yellen of the year. but let's take a look at the markets and see how they're reacting. watching a lot of gyrations. the dow up by 189 points. but right after we got the decision and statement, we were up about 250 points at the highs of the day. which was a significant gain on where we were going into 2:00 p.m. eastern. do we have janet yellen once again? let's see if we can go back to her. okay. >> what ought to matter in thinking about the stance of