they will monitor this closely. this comes to the core argument if we remain in, we have to make sure we take the proceeds of growth and continue to put them into the nhs as i've always done. the >> mr. speaker, i'm looking forward to the british people giving many opportunities for the vindictive emergency. though my right honorable friend explained that if the government is so strapped for cash, why is it still intent on spending 50 billion pounds? >> we will be strapped for cash if you believe the institute for fiscal studies at the national institute of economic and social research both impeccably independent state there at rio: our public finances between 20 and 40 billion. you don't have to be an economic expert to see if the economy

shrinks and you have fewer jobs and low wages, you get less tax receipt. if you have less tax receipt, you either have to make cuts or put a taxes were increased borrowing. it's a simple matter of mathematics. there's an easy way to avoid the situation that is devoted to -- three errors and sunday evenings at 9:00 p.m. eastern on c-span -- it re-airs on sunday evenings at 9 p.m. eastern on c-span. brennanctor john testifies about the cia's operations around the world and global terror threats. you can watch it live beginning at 9:00 eastern on c-span three and c-span.org.

>> on american history tv, this saturday starting at 1:00 p.m. eastern, we are live from gettysburg college for the annual civil war institute summer conference as authors, historians and professors examine topics such as reconstruction in the north and the post-civil war career of ulysses s grant and the origins of the lost cause. 40ththe approach of the anniversary of the smithsonian air and space museum, we will show a series of nasa films. we will look at the 1966 film, science reporter. a couple of our earlier models. this is the mercury suit. after the mercury suit is the gemini. this is a suit very similar to

this, in fact identical to this was warned by white in his extravehicular excursions. >> it does look different from that gemini suit. >> it is one of our earlier models of the apollo suit. >> tracing the development of spacesuits. 6:00, curator at jeremy kenny takes us on a tour of the smithsonian air and space museum to show some of the one-of-a-kind artifacts in the quest to go farther, higher and faster. miles inlue the 3600 33 hours from new york to paris. pilot,an unknown male his goal was to win the prize of $25,000 for the first nonstop flight from new york to paris. what it represents in the

theory of aviation is transformation of the airplane from what the wright brothers created and how it transitioned over the 20's and 30's to what we would call the modern airplane. americane complete history tv weekend schedule, go to c-span.org. -- madampresident secretary, we proudly give 72 of our delegate votes to the next president of the united states.

>> in a news conference, federal reserve chairman janet yellen said the upcoming referendum on british membership in the european union play the role the decision to keep interest rates steady. british voters will decide the issue next week. this news conference came after the federal open market committee's two day june meeting. this is an hour. >> good afternoon, the federal open market committee maintains the federal funds rate at one quarter to one half percent. this accommodative policy should support further progress towards

our statutory objectives of employment and stability. based on the economic outlook the committee continues to anticipate the gradual increases in the federal funds rate over time. they're likely to be consistent with achieving and maintaining our objectives. however, recent economic indicators have been mixed, suggesting that our cautious approach to adjusting monetary policy remains appropriate. as always, our policy is not on a preset course and if the economic outlook shifts, the appropriate that the policy will shift correspondingly. i will come back to the policy decision, but first, i will review recent economic developments and the outlook. economic growth was relatively weak late last year and early this year. some of the factors weighing on

growth were expected. example, exports have been soft, reflecting subdued foreign demand. also, activity in the energy sector has obviously been hard hit by the steep drop in oil prices since mid-2014. but the slowdown in other parts of the economy was not expected. in particular, business investment outside of energy was particularly weak during the winter and appears to have remained so into the spring. in addition, growth and household spending slowed noticeably early in the year, despite solid increases and household incomes, as well as relatively high levels of consumer sentiment and wealth. fortunately the first quarter , slowdown and household spending appears to have been temporary.

indicators for the second quarter have so far, pointed to a sizable rebound. this recovery is a key fact there, supporting the -- key factor supporting the , committee's expectations that overall economic activity will expand at a moderate pace over the next few years. despite lackluster economic growth, the job market continued to improve early in the year. during the first quarter the average was nearly $200,000 per month. just a bit slower than last year's pace. the unemployment rate held in -- held near 5%, even though notably more people were actively looking for work. however, more recently, the case of improvement in the labor market appears to have slowed markedly. we have gains in april and may, estimated to have averaged only about $80,000 per month. and while the unemployment rate fell to 4.7% in may, that

decline occurred because fewer people reported that they were actively seeking work. a broader measure of unemployment that includes individuals who want and are available to work, but who have not searched recently, as well as people who are working part-time, but would rather work full-time has flattened out. on a more positive note, average hourly earnings increased 2.5% over the past 12 months, a bit faster than in earlier years, a welcome indication that growth might be picking up. although recent market data has been unbalanced and disappointing. it is important to not to overreact to one or two monthly readings. the committee continues to

expect that the labor market will strengthen further over the next few years. that said, we will be watching the job market carefully. ongoing economic growth and an improving labor market underpin our inflation outlook. overall consumer price inflation is measured by the price index for personal consumption expenditures. that was about 1% over the 12 month, ending in april, still short of the 2% objective. much of the shortfall still continues to reflect the effects of earlier declines in energy prices and lower prices for imports. core inflation, which excludes energy and food prices, has been running close to 1.5%. as the transitory influences holding down inflation fade and as the labor market strengthens further, the committee expects inflation to rise to 2% over the next two to three years. our inflation outlook also rests

importantly under judgment that longer run inflation expectations remain reasonably well anchored. however, we can't take the stability of longer run inflation expectations for granted. while most survey measures showed little change of balance in recent months financial , market measures of inflation compensation have declined. movements in these indicators reflect many factors and therefore, may not provide an accurate reading on changes in the inflation expectations that are most relevant for wages and prices. nonetheless, in considering future policy decisions, we will continue to carefully monitor actual and expected progress towards our inflation goal. let me now turn to the individual economic projection submitted to this meeting by fomc participants.

as always, each participant's projections are conditioned on his or her own view of appropriate monetary policy, which in turn depends on each person's assessment of the multitude of of factors that shake the outlook. participant's projections for growth are slightly lower in the near term than the projections made for the march fomc meeting. the meeting growth projection now remains that 2% through 2018, in line with the estimated longer run rate. the median projection for the unemployment rate edges down from 4.7% at the end of this year to 4.6% in the next two years, somewhat below the median assessment of the longer run normal unemployment rate. the median path of the

unemployment rate has little changed from march. finally, the median inflation projection stands at 1.4% this year, a bit firmer than in march and then rises to 1.9% next year and 2% in 2018. returning to monetary policy, as i said, the committee maintains the target range for the federal funds rate. this decision reflects the committee's careful approach in setting monetary policy, particularly in light of the mixed readings in the labor market and economic growth i have discussed, as well as continuing below target inflation. preceding cautiously in raising our interest rate target will allow us to verify that economic growth will return to a moderate pace, that the labor market will strengthen further, and that inflation will continue to make progress toward our 2%

objective. caution is all the more appropriate, given the short-term interest rates are still near zero. that means monetary policy can more effectively respond to surprisingly strong inflation pressures in the future than to a weakening labor market and falling inflation. although the financial market stresses that emanating from abroad at the start of this year has eased, former abilities in the global economy remain. in the current environment of sluggish global growth, low-inflation, and already very accommodative monetary policy in many advanced economies, investor perceptions of and appetite for risk can change abruptly.

as our statement notes, we will continue to closely monitor global economic and financial developments. we continue to expect that the evolution of the economy will warrant only gradual increases in the federal funds rate. we expect the rate to remain for some time below levels that are anticipated to prevail in the longer run. because headwinds weighing on the economy mean the interest rate needed to keep the economy operating near its potential is low by historical standards. these headwinds, which include developments abroad, subdued household formation, and maker productivity growth could persist for some time. but if they gradually fade over the next few years, as we expect, then the interest rate required to keep the economy operating at an even keel should move higher as well. this view is consistent with our

-- with monetary policy. it has risen gradually to 1.5% at the end of next year and 2.5% by the end of 2018. somewhat below the estimated longer run normal level. although the median federal funds rate at the end of this year is unchanged for march, the number of participants revised their projections. for 2017 and 2018, the median projection is 0.25% to 0.50% lower than in march. made to the estimated longer run levels with the federal funds rate. as i have noted on previous occasions, participant projections for the federal funds rate, including the immediate path are not a fixed , plan for future policy.

policy is not on a preset course. these forecasts represent participant, individual assessments, over appropriate policy, given their projections of economic growth, employment inflation, and other factors. however, the economic outlook is inherently uncertain. so, each participant's assessment of appropriate policy is also necessarily uncertain, especially over longer time horizons, and will change in response to changes to the economic outlook and associated risks. finally, the committee will continue its policy of reinvesting proceeds from maturing treasury's security and principal payments from debt and mortgage-backed securities. as highlighted in our policy statement, we anticipate continuing this policy until

normalization at the level of the federal funds rate is well underway. maintaining our sizable holdings for longer-term security should help maintain accommodative financial conditions and should reduce the risk that we might have to lower the federal funds rate to zero in the event of a future large adverse shock. thank you. i will be happy to take your questions. >> one of the things hanging over markets right now is the vote in the united kingdom next week. how much of a factor was that in today's decision, relative to the questions you have alluded to about the domestic jobs numbers and inflation data? and can you talk about the channels you think about when you talk about the potential

impact of a brexit on the u.s. economy? thank you. janet yellen: well, the upcoming u.k. decision on whether or not to leave the european union is it something we discussed and i think it is fair to say it was one of the factors that factored into today's decisions. clearly, this is a very important decision for the united kingdom and for europe. it is a decision that could have consequences for economic and financial conditions in global financial markets. if it does so, it could have consequences in turn for the u.s. economic outlook that would be a factor in deciding on the appropriate path of policy.s so, it is certainly one of the uncertainties we have discussed and have factored into today's

decision. >> thank you. the fed's outlook for rates has come down sharply for 2018, especially, but he has been -- it has been coming down gradually over time. almost a full percentage point compared to a year ago and yet, the gdp outlook remains the same. what has happened in the past quarter to the committee's outlook for rates to be brought down so much in 2018 and further from the long run than it was say, and the prior estimate that was out there. has there been a dramatic change in the committee's view on the relationship from gdp to rates? maybe you can explain why the fed has to keep lowering these rates and getting that forecast wrong. janet yellen: as i mentioned in my opening remarks, there is really a great deal of uncertainty around each

individual assessment of the appropriate level of rates, particularly as we go further out in the forecast horizon and when we come to the long-term. i think what we can see and what many econometric and other studies show is that this so-called "neutral rate," namely, the level of the federal funds rate that is consistent with the economy growing and operating near full employment, that rate is quite depressed by historical standards. many estimates would put it in real or inflation adjusted terms near zero. now, the path that you see in the dot plot for rates over time, is influenced. there is accommodation and as we achieve our objectives, i think most participants feel that the

accommodation needs to be gradually removed. but a very important influence in the out years is what will happened to that neutral rate, that will just keep the economy operating on an even keel? i have often, in my statements and remarks, talked about headwinds that reflect lingering effects of the financial crisis. to the extent that there are headwinds, i think many of us expect that these headwinds would gradually diminish over time. and that is a reason why you see the upward path for rates. but there are also more long-lasting and persistent factors that might be at work that are holding down the longer run level of neutral rates. for example, slow productivity

growth, which is not just to the u.s. phenomenon, but a global phenomenon. obviously, there is a lot of uncertainty about what will happen to productivity growth, but productivity growth could stay for a long time. we have an aging societies in many parts of the world that could depress this neutral rate in a think all of us are involved in a process of constantly reevaluating, where is that neutral rate going? in a think what you see is a downward shift in that assessment over time, the sense that mabye more of what's causing this neutral rate to be low are factors that are not going to be rapidly disappearing, but will be part of the new normal. now, you still see an assessment that that neutral rate will move up somewhat, but it has been

coming down and i think it continues to be marked lower. and it is highly uncertain. for all of the dots. >> hi, i'm jason. the median participant forecast for the federal funds rate 42017 and 2018 came down quite dramatically. but this is in contrast with the the 2016 median forecast. as you mentioned, there were a number -- actually, six participants who saw only one rate hike this year. can you comment on what it would take for two rate increases to be the likely for appropriate -- likely or appropriate policy path? and about this disconnect between the median view and the view of the voting members of the committee. if there is one, i should add.

janet yellen: i'm not going to comment on participants versus voters. you know, monetary policy, the committee feels that monetary policy, when we are looking at several years, we should show the public what the views are of all the participants in the committee, especially given the voting rotates every year. and so, that is a decision we made. but you asked me what it would take to have two increases. so you know, the committee as a whole never discusses how many increases should we have this year or next year. that's not a decision we are

making as a committee. we're making decisions on a meeting by meeting basis and trying to give the sense to the public of what we are looking for and what the basis of the decision will be. and, as the indicated -- first of all, international uncertainties loom large here. we mentioned, brexit, the u.k. decision. obviously, how that turns out is something that will factor into future decisions. and, we are also looking at the prospects for economic growth and continued progress in the labor market. um, the forecast that you see in the sep, indicates that the committee will continue to grow. we do have moderate growth, 2% growth suggests healthy growth for the rest of the year and the pickup in growth in the second quarter.

and we do expect to see continuing progress in the labor market. now, we had questions about the growth outlook because we did see slower growth in the fourth-quarter and in the first quarter. i have to say there, with respect to the slowdown we saw in consumer spending that seems to be out of line with fundamentals, we expected it to pick up and we have seen very good evidence that it has picked up. but, now the labor market appears to have slowed down and we need to assure ourselves that the underlying momentum in the economy has not diminished. so, as i said, we will be carefully assessing data on the labor market to make sure that job gains are going to continue at a pace sufficient to resulting in further improvement

in the labor market. and we will be watching the spending data to make sure growth is picking up in line with our expectations. of course, with respect to inflation, we are constantly evaluating whether or not incoming information is roughly in line with our expectations. so, we will be evaluating that during every meeting. every meeting as live. we could make it decision at any meeting to adjust the funds rate. but that is the kind of thing we would want to see to make such decisions. >> that created a labor market condition indexed a couple of index a couple of years ago that was designed to sort of bring together a lot of these factors. as i'm sure you know, the labor market has been falling since january. that suggests to some people it was your decision to raise rates in december that has caused this weakening in the labor market. can you discuss what role the fed's decision to raise rates has played into the slowdown that we can now see? janet yellen: the labor market's condition index is an

experimental research product that is a summary measure of many different indicators. and essentially, that measure tries to assess the change in labor market conditions. as i look at it, and as the index looks at things, the state of the labor market is still healthy, but there has been something of a loss of momentum. the 200,000 jobs a month with a month we saw for example, in the first quarter of the year that has slowed in recently. exactly what the reasons are for that slowing, it is difficult to say. it might turn out -- again, we should never paid too much attention to one job report. we often see large revisions. we should not over blow the significance of one data point.

especially when other indicators in the labor market are still flashing green. perceptions of the labor market remain fine. data from the jolts on job openings continue to reach new highs. there is a good deal of incoming data that does signal continued progress and strengthening in the labor market. as i said, it does bear watching. the committee does not feel it does not expect -- and i don't expect -- that labor market progress has come to an end. we have tried to make clear to the public and through our actions and to the revisions you have seen over time and the dot

plot, that we do not have a fixed plan for raising rates over time. we look at incoming data and are prepared to adjust our views to keep the economy on track. and in light of that data dependence of our policy, i really don't think a single rate increase of 25 basis points in december has had much significance for the outlook. and we will continue to adjust our thinking in light of incoming data in whatever direction is appropriate. >> i want to come back to these longer run rate projections that you had been asked about. so, yields on ten-year treasury notes have followed below 1.6%. five-year notes are near 5%. elsewhere in the world, in

germany and japan, long-term bond yields are negative. how do you explain this low level of long-term bond yields? and does it give you any pause in looking at your own projections and coming to a conclusion about whether those projections are possibly still way too high when the bond market is at a much lower level? janet yellen: so, i think the levels of longer-term rates reflect essentially, two things. one is market expectations about the path of short-term rates over, if we are considering say, a 10 year treasury security. what would be the path of short-term rates over the next 10 years? and, the second factor is the so-called "term premium," for the extra yield that investors demand in order to hold a longer

term security, instead of to invest short-term. clearly, market expectations for the path of short-term, interest rates over the next 10 years remain low. and that is a factor, the is an important factor, that i think holding down the level of longer-term yields. but perhaps as important, or maybe even more important, the term "premium" is also low and has probably come down. now, when we engaged in longer-term asset purchases, our very purpose in doing that was to drive down longer-term yields by making these assets scarcer and hence, more valuable to the public that wants to invest in long-term securities.

and we were consciously attempting to drive down that term premium. we continue to hold a large quantity of those securities, but we are not adding to them. but in many parts of the world, the ecb for example and the bank of japan, are also engaging in quantitative easing, buying longer-term assets, and pushing down those term premium. so, i think term premium are still very low. as well as the expected path of short rates. >> to below levels give you any doubt about whether you will be able to get rates to where projections say they are going? janet yellen: i want to say again, we are quite uncertain about where rates are heading in the longer-term. we write down our best estimates at this time of what is a longer

run normal level of the federal funds rate? those are numbers about which there is great uncertainty. as i said, we have good reason to believe that this so called neutral rate, or rate compatible with the economy operating at full employment, is low at the present time. and many of us believe, as a base case, it is reasonable to assume that those rates will move up over time. but we are not certain of that. it is one of the uncertainties that -- and there could be revisions in either direction, but thus far, in recent secp's, i would say the revisions have been in a downward direction. the idea that a load neutral rate might be worth closer to

the new normal. you still do see some reversions. so, we are quite uncertain about that. >> your speech in philadelphia, you called the slowdown in job growth concerning. you mentioned today you want to verify that the labor economy and the labor market is still continuing. what you need to see to convince you that the labor market is still moving towards full employment? and how long do you see this? janet yellen: though, i can't give you a formula. i know you would probably like to have a number that is cut off from what we need to see in a particular report. there are a lot of different indicators of the labor market, for example the labor market conditions index that we have referred to has 19 different indicators. clearly, we will be looking at

the next jobs report. if we were to see a healthy pace of job growth, you know, above that needed to kind of maintain the status quo in the labor market. i should say, over time, we should expect to see, as the economy comes closer to maximum employment, the likely pace of job gains is probably going to slow down somewhat. and we have seen some slowing, but the recent couple of months was very low, and arguably, not even at the pace we need to see a maintained stable market conditions. we want to see an adequate pace of job creation. there might he revisions to previous months that might change our views, but there will be other surveys of employment intentions and other indicators of the labor market that we will

focus on. so, there is no formula for what it takes, but we will be looking at the labor market. >> peter and then dana. >> also in your speech in philadelphia, you did not say it would be appropriate for a rate hike to occur in the coming months. did you intentionally leave that out? janet yellen: um, we do need to make sure there is sufficient momentum. i don't know what the timetable is going to be to gain that assurance. every meeting his live. -- every meeting is live. there is no meeting that is off the table. no meeting is out in terms of a possible rate increase. but we really need to look at the data and i can't pre-specify the timetable.

so, it is not comfortable to say, it is in the next meeting or two, but it could be. it is not impossible. it is not possible that by july, for example, we would see data that would lead us to believe that we are on a perfectly fine course and that that it was an aberration. >> peter barnes, hi. we are in an election season and in the past, the fed has been sensitive to making policy changes in election years. you have three more meetings before the november presidential election. could you comment on whether or not the election will come into play and any concern that if you change policy ahead of the election and based on your forecast today, you obviously could -- are you concerned that that could then lead to charges that the fed is trying to change

policy to influence the outcome of the election? because the fed has been sensitive to that in the past. thank you. janet yellen: so, we are very focused on assessing the economic outlook and making changes that are appropriate without taking politics into account. look, if the incoming data were in the coming months, to justify the kind of gradual increases that we have long discussed that we see as appropriate in light of the outlook, i think markets should not be surprised by such a decision if we make it and it is obviously consistent with the data we have seen. and the committee will feel free to move in the coming months if we think it is appropriate.

>> bloomberg. you mentioned that we are getting a slightly different signal when it comes to inflation and inflation expectations. can you detail a little bit, which you look at. are you concerned about inflation expectations for the cycle of actual inflation? janet yellen: well, we are looking at both. i would say, with respect to the behavior of inflation, inflation is behaving roughly in the manner i would have expected. i have really not seen significant surprises there. we have long said that the important reason that inflation is as low as it has been is because of past declines in energy prices and increases in the value of the dollar. as those factors begin to dissipate, we would see inflation moving up. now, that is exactly what we are

seeing. it is inline with our thinking and the data. those things have stabilized, their influence is dissipating. with respect to core inflation, which is partially influenced also by the dollar, but trying to pull out the dollar and import price influence, but core inflation seems to be behaving roughly as one would expect with well anchored inflation expectations and an improving labor market. so, i'm not seeing anything -- inflation even core inflation, it is well under 2%. i continue to think the evidence supports a projection that it will move up over the next couple years, back toward our to present objective. -- toward our 2% objective. in the past, economic series suggests that inflation expectations are relative to

price. so, we do monitor indicators of inflation expectations carefully. now, it is very hard to know exactly what inflation excitations are relevant to actual price and wage decisions. and so, for example, we have seen the michigan survey, a measure of household inflation and expectations move down. it is a preliminary number. it is hard to know what to make of it. we have certainly taken note of it. but surveying-based measures that forecasters say are quite stable. and measures of inflation compensation, i always try to be careful to college inflation -- careful to call it inflation compensation, rather than inflation expectations. they are not inflation expectations. inflation expectations influence those market measures, but there is also an inflation risk premium.

and there are actually good reasons to think that the inflation risk premium could have decline to significantly and might be depressing those measures. so, we watch them. we have taken note in the statement that they have moved down. but actual inflation is behaving more or less as would be expected. >> marti? >> marti with the associated press. when the april minutes were released, they caught markets by surprise. they seemed to show that there was an active discussion about a possible june rate increase, something we had not gotten from the policy statement that was issued right after the meeting. was that a conscious decision, to hold back and tell us when the minutes came out about the june discussion? and if so, could you tell us

what surprises we could see in the june minutes? [laughter] janet yellen: so, the minutes always have to be an accurate discussion of what happened at the meeting. so, they are not changed after the fact in order to correct possible misconceptions. there was a good deal of discussion at that meeting of the possibility of moving in june and that appeared in the minutes. i supposed in the april statement we gave no obvious hint, or a calendar-based signal that june was a possibility. but i think if you look at the statement, we pointed to slower growth, but pointed out that the fundamentals -- there was no obvious fundamental reason our growth to have slowed. and we pointed to fundamentals underlying household spending

decisions that remained on solid ground, suggesting that maybe, this was something transitory that would disappear. we noted that labor market conditions continue to improve, inline with our expectations. and we did downgrade somewhat our expressions of concern about the global risk environment. so, i do think that there were hints in the april statement that the committee was changing its views of what it was seeing. we continue to say, we think of economic developments involve in line with our expectations, the gradual and cautious further increases, we expect to be appropriate. and i suppose i was a somewhat surprised with the market

interpretation with the june minutes -- with of the minutes of the april meeting. they were an accurate summary of what had happened. >> jerry? >> jerry with the afp agency. the fed has are beautifully voiced -- the fed has repeatedly voiced concern over the wage growth. could we boost the higher wages and eventually drive of inflation? janet yellen: so, i think that the minimum wage increases that have gone into effect, estimates that i've seen suggest it is a relatively minor influence on the aggregate level of wage inflation. i would take somewhat faster wage increases to be a sign that labor market slack is

diminishing and that the labor market is approaching conditions that are consistent with maximum employment. so, i think you know -- i think we have seen some hints, perhaps preliminary indications that wage growth is picking up. and as much as anything, i think it is a sign of a generally healthy labor market, which is what our mandated objective is to achieve maximum employment. that would be a symptom of it. >> greg and then justine. >> greg from market watch. there has been a lot of discussion in the last couple months about the slow pace of demand in the global economy. some economists think that central banks should think about using helicopter money.

maybe in japan or europe first. but then, ben bernanke weighed in, saying he thought it would be a good thing for the fed to put helicopter money inside its tool kit. in case there was a downturn. so, i would like to get your comments on that. janet yellen: so, in normal times i think it is very important that there be a separation between monetary and fiscal policy. it's primary reason for independence of the central bank. we have seen all too many examples of countries that end up with high, or even hyper inflation, because those in charge of fiscal policy direct their central-bank to help them finance it by printing money. and maintaining price stability and lowering stable inflation is very much aided by having

central bank independence. now, that said, in unusual times where the concern is with very weak growth or possibly, deflation, rather rare circumstances. first of all, fiscal policy can be a very important tool. it is natural that if it can be employed that, just as monetary policy is doing a lot to try and stimulate growth, fiscal policy should play a role. normally, you would hope that in an economy with those severe downside risks, monetary and fiscal policy would not be working at cross purposes, but together. whether or not in such extreme circumstances there might be a case for, let's say close coordination with the central

playing a role in financing fiscal policy, this is something that academics are debating. it is something that one might legitimately consider. i see this as very abnormal. where one situation needs an all-out attempt. even then, it is a matter academics are debating, but only in an unusual situation. >> justine and then steve. >> yahoo! finance. now the fed has started the process of raising rates, various officials have said that the fed could go cash flow negative in the scenario as capital losses are taken on the portfolio bond. do you see this happening, and when might this happen? janet yellen: you're talking about our income going negative? >> yes.

janet yellen: it is conceivable in a scenario where growth and inflation really surprise us we wouldupside that have to raise short-term interest rates so rapidly that the rates we would be paying on reserves would exceed what we are earning on our portfolio. even then, we have about $2 trillion in liabilities, the currency on which we pay no interest. this does require an extreme scenario with very rapid increases in short-term interest rates. it is conceivable, but quite unlikely that it could happen. happen, wewere to would have an economy that would

be doing very well. this is probably an economy that everyone would feel very pleased was performing well, better than expected. goal,monetary policy, our is to price stability and maximum employment. we would probably feel we had done very well in achieving that. we usually make money. we have been making a lot of money in recent years, but the call of monetary policy is to not maximize our income. in a very strong economy like see athe treasury would lot of inflows in the forms of tax revenues, too. international. thehat extent do you feel strain in raising interest rates are low or negative rights that

foreign central banks are pursuing, possibly out of concern for what it might mean for the dollar exchange rate. if that is a constraint, to what extent might do also be ,oncerned about the impact ong, of low domestic rates possibly distorting domestic markets? , the state ofso foreign economies, their growth outlooks and the stance of monetary policy, those are factors that influence the u.s. outlook. influence the appropriate stance of monetary policy. we do look at foreign rates. , the prospects for growth in those economies in considering the stance of policy. differentials between countries

in likely policy paths do tend to spillover into exchange rates . that is a standard part of how monetary policy works, and a has both allar depressing effect, creating channels with which domestic demand is depressed. ,t the moment, net exports will, for quite some time and probably going forward, will be somewhat of a drag on u.s. growth. that is a factor that we take into account. increases in the dollar we have servednce mid-2014 has to push inflation down as well. they could also have impacts on commodity prices that are relevant. it is certainly relevant to the

stance of u.s. monetary policy, as a constraint, i would not go so far as to say it is a constraint on monetary policy. when we have an outlook for , if weing trend growth held rates absolutely flat, we have reason to believe inflation would overshoot our target, we would see a case to gradually raise rates over time. at the moment, i think markets to expect, and this is factored into market prices, a gradual path for rates to increase over time. for example, if we saw upside surprises to growth and inflation and had to raise , one ofrm rates faster the channels by which that would

work with be the associated impact on the dollar that is a standard channel through which the monetary policy transmission mechanism works. we would take it into account and would not feel constrained, but that is part of how it would work. >> last question. market place. how much are you watching oil prices and their impact on inflation and how that could affect the timing of future rate increases, and how much it might increase rates. oil prices have had many different effects on the economy. we have been watching oil prices .losely, as you said falling oil prices pull down inflation. totakes falling oil prices lower inflation on a sustained basis. once they stabilize at whatever the impact on inflation

dissipates over time. we are beginning to see that happening. not only have they stabilized, they have moved up some. their impact on inflation is waning over time. had a veryhave also substantial negative effect on drilling and mining activity that has led to weakness in investment spending, job loss, manufacturing, and obviously in the energy sector. it has different effects in different countries and different sectors. for american households, it has been a boon. since mid-2014, the decline in energy prices, oil prices, has probably resulted in gains of $1400 per u.s. household. int has had an offset

spending. in many countries around the world that are important , the declineorters we have seen in oil prices has had a depressing effect on their growth, their trade with us and other trading partners, and caused problems that affect spillovers to the global economy . it is a complicated picture. >> thank you. >> today on c-span, host washinn journal is next with your facebook and comments. then we work on the annual defense spending bill. in 45 minutes congressman david

discusses the mass shooting and olindo and u.s. gun laws. we talked to congressman paul gosar about the enlistment of noncitizens in the u.s. army. ♪ host: good morning on this thursday, june 16. a unique day on capitol hill yesterday. senate democrats led by chris arphy of connecticut demanded vote on gun legislation. the senator, with help for his -- help from his colleagues held the floor for 15 hours. announce the senate with have a vote on a sure thing those on the no-fly list from buying guns. on the house side last evening, a bipartisan show support for the stanford rate victim. when a group of democrats,