>> we just heard word from the committee that they are done for the day. if you want to see the hearing earlier today in its entirety,

go to our video library at c-span.org. join us later today for author peter edelman. "so rich so poor" talks about why our economy creates poverty and wealth at the same time and offers suggestions on how to improve the conditions of tens of millions of americans living below the poverty line. we'll have it live at 6:30 eastern on booktv.org. >> this weekend on after words, a detail of "fast and furious." >> it was kept from american people and mexican people as well. there are hundreds of faceless, innocent mexican citizens who have been murdered as a result of this. the only thing that we knew outside of the government program was that guns from american gun dealers were going into mexico and causing all of these problems with the cartel when really the government was

sanctioning these sales and sending them into mexico. >> she's interviewed by national journal white house correspondent major garret sunday night at 9:00 part of book tv this weekend on c-span2. this weekend on american history tv, harvard professor on the movement to end slavery. >> it's a fascinating aspect is that when lincoln gives his inaugural, the abolitions are still a tiny minority and still despised. what transforms abolitionist into respected critics of the american scene is ft. sumter. >> more from political figures that ran for president and lost but changed political history. the contenders. a look at a socialist candidate for president.

sunday at 7:30 p.m. american history tv this weekend on c-span3. the federal reserve yesterday lowered its expectations for the economy this year. recovery will continue at a slow pace and unemployment remains at about 8% according to fed chair ben bernanke who held a news conference after the fed meeting yesterday. the fed is committing 267 billion to extend its operation twist program. this is 45 minutes. >> good afternoon. before we get to questions, i'll summarize today's policy action by the federal market committee and place the committee's decision in the context of our economic outlook and collective judgment about the appropriate path of monetary policy. as indicated in the statement released earlier this afternoon, the committee is maintaining a highly accommodative policy. we decided to keep the target range for the federal funds rate to 0 or one-fourth percent and

anticipate economic conditions are likely to warrant low funds rate through late 2014. in addition the committee decided to continue through the end of the year our program of lengthening maturity of our securities holdings, rather than completing the program this month as previously scheduled. specifically, the committee intends to purchase treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of treasury securities with the remaining maturities of approximately three years or less. the details of our planned purchases and sales were described in an accompanying statement released today and can be found on the federal reserve bank of new york's website. the continuation of the maturity extension program should put downward pressure on longer term interest rates and make broader financial conditions more accomodative than they would

otherwise be supporting economic recovery. in conjunction with today's meetings, the seven board members and 12 reserve bank presidents submitted their individual economic projections and policy assessments for the years 2012 to 2014 and over the longer run. these projections are important inputs to the committee's deliberations. incoming information suggests the economy continues to expand at a moderate pace in the face of headwinds generated by the situation in europe, still depressed housing market, tight credit for some borrowers and fiscal restraint at the federal, state and local levels. business and household spending are increasing at rates consistent with moderate economic growth, though household spending appears to be rising at a somewhat slower pace than earlier this year. employment gains have been smaller in recent months and the unemployment rate at 8.2% remains elevated. in light of these developments committee participants have generally marked down their projections for economic growth but most still see the economy as expanding at a moderate pace

over coming quarters and picking up gradually. based on their projections for economic growth fomc participants foresee slower progress in reducing unemployment than they did in april. projections for the unemployment rate in the fourth quarter of this year have a central tendency of 8.0 to 8.2% declining to 7.0% to 7.7% in the fourth quarter of 2014. levels that would remain above participants estimates of the longer run normal rates of unemployment. in addition to projecting only slow progress in bringing down unemployment most participants see the risk to the outlook weighted mainly towards slower growth and higher unemployment. in particular, participants noted that strains in global financial markets, associated principally with the situation in europe, continue to pose significant risk to the recovery and to further improvement in labor market conditions. meanwhile, inflation has declined recently, primarily reflecting lower prices of crude oil and gasoline.

longer term inflation expectations have remained stable and the committee anticipates inflation over the medium run will run at or below the 2% rate that judges most consistent with its statutory mandate for maximum employment and price stability. more specifically participants projections of inflation have a central tendency of 1.2 to 1.7% for 2012 and 1.5 to 2.0% for 2014. the economic projections submitted by fomc participants are conditioned under individual assessments of the appropriate path of monetary policy. as you can see from the chart, committee participants have a range of views about when the initial increase in the federal funds rate is likely to be warranted. after a thorough discussion of those views, and of the ongoing uncertainty and risks surrounding the outlook, the fomc as i mentioned, maintained its collective judgment that economic conditions are likely to warrant exceptionally low levels to the federal funds rate

at least through late 2014, and agreed to provide further support to the economy by continuing the maturity extension program. the committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability. thank you. i'll be glad to take your questions. >> steve liesman, cnbc. mr. chairman, looking back on the last four years of fed policy, i think it's probably fair to say it's been bold and yet at the same time halting. you did qe1 and then stopped and did qe2, operation twist and told us it was going to end in june and now you've extended it. how would you respond several years from now a young. i.t. graduate student came and said the problem with the fed policy during this period was it

was too incremental and the economy under performed was because of that incrementalism and what do you think the dangers are right now that today's action is also too incremental? >> well, of course, you know, we cut the federal funds rate in a continuous fashion until december of 2008 and since then we've been operating with nonstandard monetary tools including asset purchases and extension of maturities. by their nature, these tend to be lumpy. we haven't done them in a continuous way. but our view of the affects of these programs on the economy is that the total stock of outstanding securities in our portfolio is what determines the level of accommodation that the economy is receiving. in that respect it wouldn't be really a start and stop, rather whenever we have stopped purchasing, the level of accommodation that was already in the system remains there until conditions warrant further action. now, underlying all this, of course, is the fact that the

outlook has changed. like many other forecasters, the federal reserve was too optimistic early in the recovery about the pace of recovery and we've had to add additional accommodation going forward as we've seen, in fact, that the headwinds have kept the recovery from being as strong as we would like. but again, by the nature of the -- of these unconventional tools, they are -- tend to be more discreet in their size but they continue to have accomodative effects even after the pattern of purchases has ended. >> worried about incremental --? >> we've taken a step today which is a substantive step which will provide additional accommodation for the economy and moreover, we have stated we're prepared to take further steps if necessary to promote sustainable growth and recovery in the labor market. so we are prepared to do what's necessary. we are prepared to provide

support for the economy. >> mark with reuters. mr. chairman, many analysts have characterized today's step as somewhat modest. your own outlook has a much lower gdp projection. the unemployment rate in your outlook is -- shows possibly no improvement at all in the unemployment rate through the end of this year. the program itself is smaller and of shorter duration than the original operation twist. given this weaker outlook why such a modest program and when you say you're prepared to take further action which is a stronger characterization than in your last meeting does that mean you're prepared to do a full-on new asset purchase program? >> well there's been a great deal of economic news since our last meeting. the incoming data were somewhat disappointing, but not entirely clear how to read them. we had issues with weather and seasonal adjustment and other factors.

meanwhile, europe has had additional problems. we've seen some of those effects in the financial markets. i think there's some case to be made for making some additional judgments about where the economy is going. that being said, the step we took, the extension of the maturity extension program i think is a substantive step and will provide some additional support and yes, additional asset purchases would be among the things that we would certainly consider if we need to take additional measures to strengthen the economy. >> john from "the wall street journal". mr. chairman, i would like to ask you to respond to a different set of criticisms. this criticism which you hear from capitol hill and wall street and different places is that the fed has already pushed interest rates to an extraordinarily low level, a historically low level and that there isn't anything more that

the fed can do to help the recovery. that the criticism is that the fed at this point should stand down and let congress or the white house attend to the economy's ailments or let market forces attend to the economy's ailments. what do you think of those arguments and how would you respond to them? >> well, as i've said many times, monetary policy is not a panseea. monetary policy is not going to solve our economic problems. we welcome health and support from any other part of the government from other economic policymakers. so, collaboration is -- would be great. i wouldn't accept the proposition, though, that the fed has no more ammunition. i do think that our tools, while they are nonstandard, can create more accommodative financial conditions, can still provide support for the economy, can still help us return to a more normal economic situation.

that being said, again, any other support that is forthcoming, any other economic policies that are undertaken that are helpful in terms of making our economy stronger, are welcome, but i do think that monetary policy still does have some capacity to strengthen the economy by easing financial conditions. >> thank you. mitt romney recently said that qe2 had a relatively little impact on the economy. he said that was in part because of the president's policies. and he said that qe3 was unwarranted and could have negative effects. do you agree that qe2 had little effect on the economy, do you think the president's policies has had an effect on the effectiveness of monetary policy and do you think it's appropriate for a presidential candidate to comment on the

future path of monetary policy. >> i will say first we think both of the asset purchase programs, qe1 and qe2 did have significant effects on asset prices and financial conditions and although there were certain problems in transmission, for example, the housing market has not been as responsive as it's been in some sometimes in the past we think they were both effective in providing support for the economy and in particular, so-called qe2, ended what looked to be an insip yent deflation problem when we first introduced it. so i do think those have been effective. as i said, we think these kinds of programs can still provide additional support. with respect to the rest of your questions, i just want to reiterate that federal reserve is nonpartisan, we are very serious about taking our decisions based on purely economic grounds without political considerations, and we'll continue to do that.

>> thanks. jim with the "l.a. times." long-term interest rates, mortgage rates are already at historic lows. how much more help can an extension of operation twist do and to lower interest rates? >> well, the interest rates are quite low and they're being pushed down more by safe haven flows and other tack factors. i think we can lower interest rates more, but beyond that, operation twist and asset purchases work also through other channels, in particular by acquiring securities in the market and bringing them on to the fed's balance sheet we essentially induce investors to move into substitute securities. for example, an investor who sells a treasury security to the fed may end up buying a corporate bond instead. the effect will be to lower

corporate bond rates and corporate spreads. or, a bank may, having sold its treasury securities may decide to make a loan instead. so it's not just the effect on the long-term interest rate. but there's a broader set of effects that feed through other asset prices, other interest rates, other spreads and provide a broader ease in financial conditions which is supportive to the economy. >> thank you. jeff kearns from bloomberg news. given the projections today going out to 14, seeing unemployment almost where it is now for another two years, can you look past 2014 and can you -- now that we're five years past the top of the stock market, six years past the top of the housing market, can this go on for a decade? can this go on longer? can you reassure americans that

it won't go on for a dozen years like the depression? >> well, it's our intention to do all we can to make sure it doesn't go on indefinitely. unemployment is still too high. but it has come down. it was about 10% at the peak and now it's closer to 8%. it's going down too slowly but it is going down. our sense is that people are finding jobs, but just not at the rate we would like to see and, you know, as i said, as the statement says, if we don't see continued improvement in labor market, we'll be prepared to take additional steps if appropriate. >> ben from "the new york times." i'm looking at the projections you all released today that show that unemployment will be between 8 and 8.2% at the end of the year. you told congress earlier this month the defining factor in your decision about whether to

do more would be whether unemployment was coming down. that's barely a decrease and i guess i'm struggling to understand why in that context you are not doing more now particularly when you say you can do more and that you would do more if it wasn't happening. >> well, first of all, again, we did take a substantive step today by extending the maturity extension program to the end of the year. again, i think that's the meaningful additional step. [ inaudible question ] >> it depends on each individual has their open path of optimal policy. we'll provide more information about that in the minutes. but again, we're prepared to do more. we have to get i think further information about the state of the economy, about where things are going, about what's happening in europe. i guess i would add to that, though, that, you know, each of these nonstandard programs does have various costs and risks associated with it with respect

to market functioning, with respect to financial stability, with respect to the exit process, and so i don't think they should be launched lightly. i think there should be some conviction that they're needed conviction then we'll take those additional steps. >> christina and peter? >> christina peterson. i know you said european policymakers are the first part of defense for the european debt crisis, but under what circumstances would the fed get more directly involved with other central banks? >> well, as you say, the europeans are the first line and europe say wealthy area. they have adequate resources to address these problems. they are very committed to addressing these problems because keeping the eurozone together and keeping the eurozone trading block together was very important to the economies of those countries. so we leave to them the

leadership. the federal reserve is very much involved in talking with and consulting with european leaders. i talked frequently to central bankers in europe including mar mario drogi and others. we did coordinate earlier in the provision of the dollar swaps to other central banks which have been useful in reducing dollars, and to allow european banks to continue lending dollars to u.s. borrowers. at this point we're consulting frequently. we are prepared to work together if that can be done constructively, but at this point, you know, we're mostly just in consultation mode. >> fox business. you talked about getting help from some of the branches of governments and that leads to questions about the fiscal cliff. have you seen any evidence that

the lack of progress on resolving the fiscal cliff issue is having an impact on the economy right now as it's slowing economic growth right now and job creation as you saw last year during this very same debate and if you're not seeing it and if you haven't seen it yet, when might we start to see it hit the economy and hurt the economy? >> well, i think it's still a bit early, but as we move forward in the year we do anticipate that the uncertainty with the so-called fiscal cliff will have economic effects. we heard anecdotes in the meeting about firms that might be governed contractors that were not sure about whether the contracts would still be in place come january and making employment decisions based on that. more generally, financial markets don't like uncertainty and particularly uncertainty of this magnitude and that i think will be a negative. so that uncertainty is there and

that will be an issue. most importantly, though, is that economists get the policy right. i've talked about three elements for fiscal policy. the first is to do no harm as far as the recovery is concerned to avoid a fiscal cliff that would significantly damage the recovery, but second to maintain the effort to maintain a fiscal path over the long term and third, to use fiscal policy effectively and to have a better tax code, to make good use of government spending programs and to make it efficient, effective and so on. if congress does all those thing, the ultimate benefits will be substantial. >> peter burke. just listening to your answer here, how beneficial would it be for the u.s. economy right now, given some of the talk on capitol hill that the lawmakers and the administration deal with the fiscal cliff issues, perhaps temporarily and kick the can down the road to next year and

deal with it sooner rather than later would that end or limit some of the uncertainty that would be beneficial given the state of the economy at the present moment? >> well, that's a difficult problem. i'm not entirely sure. on the one hand, a little clarity would probably be helpful for the reasons that i described because people are uncertain about what's going to happen. on the other hand, investors, i know, would like to see congress take actions that put us on the long-term, sustainable, fiscal path and simply kicking the can down the road without any other indication about what might be done, but what kind of policies might be enacted could be a negative for sentiment because it might induce people to worry more about the seriousness of congress in addressing the fiscal issues. >> the financial times. mr. chairman, one critique of the fed's accommodative actions over the past few years has been that it's helped those with the

least propensity to spend and the large businesses and corporations while the fed's impact on those with the most propensity to spend and the cash-strapped and middle-income households has been muted and i would like for you to focus on access to credit. >> access to credit is a major issue, no question about it. mortgage access is much tighter than it's been for a long time given credit card access is more restricted than it has been in the past and what that does to some extent is it mutes the impact of the fed's actions. that being said, i don't think it's at all accurate to say that the federal reserve policy is not helping the broad public. first of all, many americans are able to take advantage of lower interest rates. many people have refinanced or bought homes. others have taken out loans to buy cars, auto loans are cheap

and broadly available. so there has been impact through lower interest rates, but i think more broadly is the indirect effects. if a firm has a low cost of capital and we've seen a lot of corporate borrowing in the last couple of years then they're more likely to expand and add capital to add products and consequently they're more likely to hire, and although again, the extent to which the payrolls have increased the last few years has been disappointing there have been significant increases and the unemployment rate has come down by two percentage points. some of that comes from the broad impact of fed policy on spending, on investment and those effects -- those affect the broad public indirectly by promoting hiring and by promoting demand for products that the people are producing.

>> to kefin a in akevin and ove pep. >> what with are the choke points are in the economy. they had the midyear outlook conference call in which they had the slowdown on the fiscal cliff and more importantly europe and said much bigger pass through than everyone anticipated today and europe not so much is basically an economy that the ceo of boeing said clearly, we're already trimming jobs. we're already cutting back and everybody else in the aerospace is doing the same. what are you hearing? are you on the phone with people that the predecessor was given to call in occasionally? what is your sense of where the choke points are that continue to thwart hiring? >> sure, i gave a list to the headwinds in my opening remarks. i do think the european situation is slowing economic growth.

first of all, europe is, if not in a recession in every country and certainly in many countries are in recession and that affects our trade with europe and the demand for our products and more broadly, the effects of european concerns on financial markets have added to volatility and brought down stock prices and have increased credit spreads and generally have been a negative for economic growth and that has been an issue and more broadly, we've seen some slowing in the global economic growth more generally including in asia, which also has reduced somewhat our ability to export. so that's one set of concerns that's been important. i mentioned two others as being primarily important and one is housing. housing usually plays a very important role in economic recovery, both through construction itself and related industries and also because higher house prices increase consumer wealth and promote consumer spending.

housing does seem to be doing somewhat better. there are some good signs in housing, but nevertheless, we're not getting the size of the boost, the amount of help in the recovery that we would normally get from a housing recovery. the other area is, as you indicated is fiscal and that happens at all different levels. federal, state and local. not withstanding programs earlier on -- in the last year or two and going forward, we have been seeing fiscal consolidation, particularly thea the state and local level, with tight budgets have led to a lot of layoffs and cancellation of projects and so on. i understand that these are necessary steps profrom the perspective of individual states and locality and not criticizing that. it's just a fact, though, that these contractions are affecting the pace of growth in the broader economy. so i think those would be the main things i would point to and put them all together and you have an economy