jonathan hoenig capitalist pig hedge fund and steve moore, columnist at heritage. you don't want to miss ron paul, outspoken fed critic weighing in on janet yellen on inflation. meantime let's go to peter barnes. >> no change in the fed's interest rate forecast guidance. no change in the interest rate guidance, not in the language, but, the fed's forecast, new economic forecast suggests it may raise interest rates a bit faster in 2015. also the fed has released an update to its policy normalization plan to better target interest rates with new tools once it begins to raise those rates. let's jump to the economic forecast first. quote, information received since the federal open market committee met in july, suggests that economic activity is expanding at moderate pace. on balance labor market conditions improved somewhat further. however the unemployment rate is little changed and a range of labor market indicators suggest

there remains significant underutilization of labor resources. household spending appears to be rising moderately and business fixed advancement is while recovery in the housing sector remains slow. fiscal policy restraining economic growth and extent of restraint is diminishing. inflation is lower than longer run objection and longer term conditions remain stable. skipping over redundant language from the last policy statement, if you had cuts quantitative easing by another $10 billion a month as expected beginning in october. it also keeps the federal fund rate at zero to a quarter of a percent. this forward guidance, this guidance on interest rates, no change from the previous statement though some were expecting it. quote, the committee continues to anticipate based on its assessment of economic factors it will likely be appropriate to remain the current target range for federal funds short-term rates for a considerable time

after the, asset purchase program, quantitative easing, program end later this year. the vote on the policy statement today was 8-2. two dissents in this statement, voting against it were richard fisher and charles plosser. fisher of the dallas fed, a hawk, said that he believed that the continued strengthening of the economy warranted a quicker reduction in monetary easing than is suggested in today's forward guidance. president plosser of philadelphia, also a hawk, objected to the policy guidance as well. he doesn't like the fact it is calendarer-based. on the new plan updating the 2011 plan for how the fed unwinds this 4 1/2 trillion balance sheet and how it manages interest rates going forward when it starts to raise them, it announced it will formally employ two new tools. without getting weedy, one is what the fed pays banks on excess reserve, interest rate it

pays then. the second is so-called reverse repurchase agreement facility. again it will help them fine tune interest rates as it starts to raise them. and it says that it will reduce its holdings of bonds in a grad all and -- gradual and predictable manner. we want to look at economic projections, updated economic projections. not much change from the june projections for 2014. the big, the big change is in the gdp growth projection for 2015. a big downgrade there to 2.% in 2015 from a 3.1% projection in july. basically very little change in the outlook for the unemployment rate. sees it at about 6% for 2014. about five 1/2 2015. also no change basically in the fed's inflation forecast. but, the hint that the fed might

begin to raise rates a little sooner than the markets were expected come in this infamous dot chart, dot plot that we get. first of all, just fed member, participant sees, says the rates should rise this year. 14 say next year. and two say in 2016. but it is in the range of expect expected levels of rates for next year that the subtle change that suggests that the fed sees its short-term target rate at about 1.5% by end of next year. in june it looked like the consensus forecast was for about 1%. so, street a lot there to chew on. melissa: but the very last thing you mentioned, that is what the market is focused on right now, the famous dot plot where it shows where everybody is anticipating within the fed interest rates will be over the next few years and that looks

like raising sooner, faster, than previously thought. we're looking at market right now. you can see that is called the market. that is down 22 points. thank you. we were starting up about 26. that drop-off you see is reaction to the rate raise. i want to bring in james freeman. what is your reaction? >> it is good news if they say we'll start moving interest rates up but i think you would like to see this considerable time phrase eliminated. it should be now. janet yellen still doesn't seem quite ready to take away the punch bowl from wall street or washington. melissa: tom sullivan, everybody would have freaked out though. you look at market reacting to this which was relatively limited, if she had done what james said what would happen? >> i look at the dot chart and i think it is way overplayed because they have been keep pushing out the time when rates will keep going up. this is all an experiment on how they got into this. they're still in an experiment how to get out of it. melissa: yeah. >> at this point i think they're

just clawing their way ad hoc until we get into the year. we'll see how it goes. i'm not so sure they need to raise interest rates right away. i don't think this economy is that healthy. melissa: charlie gasparino. >> there is no news in this. melissa: there is news. there is. that is why the market is reacting, faster -- >> market is coming back, down six points. this is not a change in interest rate policy. it is not a change in policy for the fed. if you're ron paul, i can't wait to hear from him. you're saying same ol', same ol', settings up for disaster. if you're me, i don't know, i don't think so. wheel see what mr. paul says. melissa: alan knuckman, do you agree with charlie gasparino. >> i agree with charlie believe it or not. >> market is up by the way. melissa: >> played this perfectly and markets, 1995, midpoint of all time selloff. look at weekly basis, stay above that. slow and steady ahead. why people want to raise rates right now beyond me. let the market do its thing.

melissa: john lonski? >> don't have to raise rates right away. inflation is well-contained. the dollar is getting stronger. recently the market is looking for the first rate hike to take place in the middle of 2015. by the end of 2015, fed fund ought to be in a range of 3/4 of a percent to 1%. i think market will be proved to be a better indicator where fed fund is headed as opposed to the infamous dot chart. melissa: nicole petallides is on the floor of the new york stock exchange. the market is coming back. we're not back where we were when the announcement was made but what is everyone saying down there? >> we had some volatility over last ten minutes. we were negative. we were up 20. we got the news. shot up to record new highs, 17,181, only to see us back in negative territory. bond yields scooched higher. gold sold off and vix index spiked. ted weisberg at seaport securities said you may

want to change how you're investing in this market and move things sensitive to higher interest rates, do better such as banks an insurance. that may be the play going forward. melissa: thanks to all of you. coming up next, ron paul on the fed. he will certainly not like any of this. former republican congressman what demands to see from janet yellen. by the way audit the fed just passed the house. this was his pet project. just a little while ago, passed the house. we'll talk to him about that. plus fed chair janet yellen getting ready to meet the press. we'll bring you the news conference live when that happens. a lot more "money" coming up. don't go anywhere. know that chasing performance can mean lower returns and fewer choices in retirement. know that proper allocation could help increase returns so you can enjoy that second home sooner. know the right financial planning can help you save for college and retirement.

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melissa: you are looking at live pictures from the federal reserve as we await fed chair janet yellen news conference. we'll bring you live as soon as it starts in a few minutes. he is the man who would like to do away with the fed, always outspoken ron paul joins me now. congressman, welcome to the show. thank you for joining us. >> thank you. melissa: our panel just heard more of the same nonsense from the fed we've been hearing. what is your opinion. >> wow, there is something going on. i agree with your panel.

it is total nonsense. i get really a charge out of days like this more so today than ever because i see it from a fray market. free markets are set by not only tens of thousands millions, billions of decisions every single day and they decide prices. that's why we don't believe in wage and price controls we say but somehow we have morphed into this situation where one person can determine the money supply and determine the interest rates which affects everything that we do and we hang on every single word. to me it is an economic circus what goes on. and i know there is a lot of power and a lot of clout and everything yellen says has significance but it is so far removed from what a market should do. so, yes we go through depressions and rapid inflations of '70s. we have a grand, now we have the great recession. we're just anticipating. when is the next crisis going to come? because we know it is there. there is a gross distortion, worse than ever before.

melissa: what is the crisis though? do you think there is inflation coming and will we have the tools to deal with it? >> well, what about an exaggeration of what we had in '08 and '09. a financial crisis, liquidity at this dropping. stock market crisis. debt is the big problem. some day people will recognize it. how much warning do you get? the crisis in ukraine is really an economic crisis. you know, needed help. greece. it is over and over again. it is debt. and we have it and we will have the crisis. we're going to depend on one person saying, no, we don't want to raise interest rates in april. we want to raise them in january or something like that. that is so far removed from reality. melissa: let me ask you. audit the fed just passed the house. is it meaningful? what would that change? what would auditing the fed make happen differently? >> we might find out what their do with their shenanigans. who gets bailed out and what

they did with $15 trillion last go round. which banks got bailed out. which central banks got bailed out and which countries got money and what is going on. what is wrong with transparency. auditing the fed would be very good because once it is audited we realize there is a lost monkey business going on and we would work toward during the next crisis maybe we'll talk about getting rid of it. but right now, no -- melissa: you think big coming crisis is the debt crisis based on what we're doing or what we've done? >> debt is the major problem to deal with when all you have is debt. even when you can prince money, wealth is not, printing money, is not wealth. and the debt always gets liquidated. either gets liquidated by defaulting which we won't. we'll always pay it out. but eventually the debt is paid off paying off with bad money. yet the world today, they mysteriously love janet yellen,

believes anything she tells us. we keep printing money and it will last forever. it won't last forever. i wouldn't be surprised if it is a lot closer than a lot of people realize. melissa: congressman ron paul, thank you so much for joining us. i want to tell you the markets at session highs, much as charlie gasparino predicted at beginning of show based on the news. we're back up at session highs. up 46 now on the dow and climbing. the panel is fired up and ready react to ron paul as we count down the minutes until janet yellen takes the stage and moves markets even further. do you ever have too much money? we'll be right back. don't move.

melissa: we are taking our eyes off the fed just for a quick

second. liz claman is here with a very big interview coming up next hour we waned to make sure you knew was coming. liz, who do you have? >> he is rock star of the business world lately. certainly in high-tech. he is elon musk, ceo of not just test last, you know this face, but also of spacex, the rocket ship company that just nabbed 2.6 billion in a nasa contract to build sort after rent a rocket. a rent a seat on rockets that will take astronauts all the way up to ternational space station. this was huge news in the aerospace world. we have elon in fox business exclusive. where do you begin, melissa? we have discussion about spacex. we want to talk about the gig ba factory announcing they will build in nevada. we'll ask him how many jobs it will create. we'll talk to him about tesla, the model s will be outside. guess what color. not going to show you. but we'll tell you which color. and model x. the model x, how important is

that. crossover suv. how many preorders are in. we'll put elon's feet to the fire on whole bunch of numbers. he is the entrepreneurial spirit we so appreciate in this country. he is here speaking only to fox business at top. hour. melissa: wow, is my 7-year-old's hero. he is coming by to see the cars and shake elon's hand. >> we'll let him drive the car. melissa: why not. we're looking ahead to alibaba's huge ipo on friday. bring my panel. charlie you have breaking news. how insight all of these things are directly connected. >> i would say this, rarely get confluence of two major stories. janet yellen saying no change in interest rate policy and alibaba ipo. this is it. basically from what i understand unprecedented demand from asian institutions for this deal. unclear if alibaba will change the current price range which is in the 66, $68 area. anthony scaramucci was on the

show, sky bridge capital founder. melissa: back on friday by the way. >> south this thing could go up to 70 and it can based on what i'm hearing. underwriters will hash out the exact price range in the last 24 hours. in interest rate environment where you're printing money, heard from ron paul, very low interest rates. the market clearly said that based on where it is pricing. the reason you go out on risk spectrum to buy something like alibaba which is chinese company which has bizarre corporate structure which could be blown up if chinese government says so tomorrow based on corporate structure, the reason you buy it is because of janet yellen. particularly demand from asian institutions from my underwriting sources is off the charts. not unreal that they might up the price range. melissa: i want to bring the rest of the panel here. jonathan hoenig from the capitalist pig hedge fund. what do you think of what janet yellen done has created things like huge ipo we're seeing on friday and people reaching for risk? >> to dr. paul's point and

charlie's point are exactly right. janet yellen and fed in general have created essentially asklest encourages people to take on bad risks. fed unfortunately has history of this. they have a history of not only printing money but intervening with interest rates that prompt malinvestments. what worries me, melissa, you're starting to see cracks in the facade. high-yield bond. leveraged loans, they're starting to hit multi-month, in some cases multi-month lows. that is sign that the good times in terms of credit. melissa: steve moore, real quick, less than a minute. what is the reaction? >> i'm with richard fisher. i think that should happen faster. rates need to go up. one thing i never understood is why wall street thinks that the tight money is bad for stocks. >> you know why? >> they're good for the economy. >> the reason why because they can sell more alibabas. i heat to say it. >> it is crack cocaine. crack cocaine. >> 100% agree. melissa: james freeman, 10 seconds what do you think. >> this is seen as tradeoff we

have to accept for labor markets. i remind people we still have terrible labor market six years after cheap money. melissa: nobody move. we're minutes away from janet yellen's news conference much the fed chair hops into the hot seat right after this. what do you want to ask her. tweet me. don't go anywhere. "money" is coming right back. it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support,

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>> after printing $4 trillion worth of phony money and creating an asset bubble where the wealth effect is focused on anybody that top 1% mostly, that owns stocks, and you have exacerbated the income wealth

distribution problem in this country, 70% of the people think the economy is going in the wrong direction, why do you think, why do you think you should continue to do the same as you've been doing? melissa: jonathan, what do you think? what's your question? >> quite simply, you know, janet, miss yellen, would you invest in a rigged game? we know this is a rigged game. we literally can't trust numbers in front of us because they are manipulated by the fed. would i say, simply, madam chair, would you invest in a rigged game? melissa: i would say how are you going to get out of this? that that would be my question. just like that. steve moore, what is your question? >> the big story none of us talked about which is the dollar is going through the roof. it has been a real rise in the dollar. i would ask her is this a good thing and want to see more of it? i do. it brings capital investment into the united states. melissa: i'm the host so i will change my question. how does this movie end? james freeman what is your question? >> the question would be, what

the problems in the u.s. economy, miss yellen thinks can be solved by more cheap money. talking about earlier, we're six years, basically zero interest rates. we have median incomes below level of '07. labor force participation rates in the 1970s. talks so much about labor markets. a lot of people can be fooled to think she can control them but they she can't. melissa: let's get to nicole petallides on the floor of new york stock exchange. charlie said the when the dust clear the market would be higher and it is. >> let's take a walk, 17,181. i think we moved to 117, what we saw doreen with volatility around the fed announcement. what do you make of it now going forward here? >> i think initially you get the electronic reaction the program traders reaction to bring it back up again. i think when the dust settles all of it is good news. >> why? what is the good news in there? >> we're going to maintain the policy as is which supports the

market. >> right. >> in my opinion if they were to raise rates a little bit that is good thing. corporations have a long time to take advantage of the rates. get a little bang for us. >> talk about some of the interest rate sensitive investments. i was talking to ted weisberg, maybe you move into financials and insurance stocks. something that might be a little more amenable to higher rates. do you think that is the type of move that you want to consider? >> financials a little bit. etf took off again. that is really where money has got to be. beaten up. >> how do you feel, bullish, bearish? cautious? >> bullish. >> bullish. back to you. melissa: love it. thank you to both of you. charlie gasparino, what do you think? >> i would say this as investor you have to be in this market. but when it end, and it will end, keep watching fox business, we'll tell you when it is likely to end. it is not ending. it will be catastrophic and ain't over yet. put your money is gold. melissa: when you say it is over it will be catastrophic?

not only that he put us on the hook for us telling you when it will end. >> you can't bet against the fed. be in the market. make money, be careful. you will no know when it get out. >> good afternoon. >> the federal open market committee concluded its hearing and, as usual, released its statement. the committee also released a document describing the approach the committee intends to take when at some point in the future it becomes appropriate to begin

normalizing the stance of policy. let me underscore that our release of this information is not meant to convey any change in the stance of policy. as you know, the fomc's views on policy are conveyed in the policy statement which i will now discuss before coming back to our normalization plans. as indicated in our policy statement, the fomc decided to make another reduction in the pace of its asset purchases. the committee also maintained its forward guidance regarding the federal funds rate target and reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. let me discuss the economic conditions that underpin these actions. the economy is continuing to make progress toward the fomc's

objective of maximum sustainable employment. in the labor market, conditions have improved further in recent months, although the pace of job growth has slowed some recently, job gains have averaged more than 200,000 per month over the past three months. the unemployment rate was 6.1% in august, two-tenths lower than the data available at the time of the june fomc meeting. broader measures of labor market utilization such as the u6 measure have shown similar improvement, and the labor force participation rate has flattened out. these developments continue the trend of gradual progress toward our employment objective. but the labor market has yet to fully recover. there is still too many people who want jobs but cannot find

them, too many who are working part time but would prefer full-time work and too many who are not searching for a job, but would be if the labor market were stronger. as noted in the fomc's statement, a range of labor market indicators suggests that there remains significant underutilization of labor resources. the committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labor market. although real gdp rose at an annual rate of only about 1% in the first half of the year, that modest gain reflected in part transitory factors including a dip in net exports. indeed, profit domestic financial demand -- that is, spending by domestic households and businesses -- grew about

twice as fast as gdp. indicators of spending and production for the third quarter suggest that economic activity is expanding at a moderate pace, and the committee continues to expect a moderate pace of growth going forward. inflation has been running below the committee's 2% objective, but with longer term inflation expectations appearing to be well anchored and the economic recovery continuing, the committee expects inflation to move gradually back toward its objective. moreover, inflation has firmed some since earlier in the year, and the committee believes that the likelihood of inflation running persistently below 2% has diminished. as is always the case, the committee will continue to assess incoming data carefully to insure that policy is consistent with attaining the fomc's longer run goals of

maximum employment and inflation of 2%. this outlook is reflected in the individual economic projections submitted in conjunction with this meeting by the fomc participants which for the first time go through 2017. as always, each participant's projections are conditioned on his or her own view of appropriate monetary policy. the central tendency of the unemployment rate projections is slightly lower than in the june projections and now stands at 5.9-6.0% at the end of this year. committee participants generally see the unemployment rate declining to its longer-than-normal level over the course of 2016 and edging a bit below that level in 2017.

the central tendency of the projections for real gdp growth is 2.0-2.2% for 2014, down slightly from the june projections. over the next three years, the projections for real gdp growth run somewhat above the estimates of longer run normal growth. finally, fomc participants continue to see inflation moving gradually back toward 2%. the central tendency of the inflation projections is 1.5-1.7% in 2014, rising to 1.9-2% in 2016. as i noted earlier, the committee decided today to make another reduction in the pace of asset purchases. two years ago when the fomc began this purchase program, the

unemployment rate stood at 8.1%, and progress in lowering it was expected to be much slower than desired without additional policy accommodation. the intent of the program was to achieve a substantial improvement in the outlook for the labor market and to insure that inflation was moving back toward the committee's longer run goal of 2%. in light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the program and with the likelihood of inflation running persistently below 2% having diminished somewhat, we have reduced our pace of asset purchases again at this meeting. starting next month, we will be purchasing $15 billion of securities per month, down 10 billion per month from our current rate. if incoming information broadly supports the committee's

expectation of ongoing improvement in the labor market and inflation moving back over time toward its 2% longer run objective, the committee will end this program at our next meeting. the committee will continue its policy of reinvesting proceeds for maturing treasury securities and principal payments from holdings of agency debt and mbs. the committee's sizable holdings of longer-term securities should help maintain accommodative financial conditions and promote further progress toward our objectives of maximum employment and inflation of 2%. regarding interest rates, the committee reaffirmed its forward guidance as it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends,

especially if projected inflation continues to run below the committee's 2% longer run goal and longer term inflation expectations remain well anchored. this judgment is based on the committee's assessment of realized and expected progress toward its objectives of maximum employment and 2% inflation, an assessment that's based on a wide range of information including measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial developments. further, once we begin to remove policy accommodation, it is the committee's current 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 as reported in the participants' projections. as i will explain in a moment, the fomc now anticipates that it will continue a target range rather than a single point for the federal funds rate when normalization begins, and the dots in the chart i've distributed now show for each participant the midpoint of this target range. notably, although the central tendency of the unemployment rate in late 2016 is slightly below its estimated longer run value, and the central tendency for inflation is close to our 2% objective, the median projection for the federal funds rate at the end of 2016 at 2.9% remains

nearly a percentage point below the longer run value of 3.75% or so projected by most participants. although fomc participants provide a number of explanations for the federal funds rate running below its longer run normal level at that time, many cite the residual effects of the financial crisis which although slowly diminishing are likely to continue to restrain household spending, constrain credit availability and depress expectations for future growth in output and incomes. as these factors dissipate further, most participants expect the federal funds rate to move close to its longer run normal level by the end of 2017. let me reiterate, however, that the committee's expectations for

the path of the federal funds rate are contingent on the economic outlook. if the economy proves to be stronger than anticipated by the committee, resulting in a more rapid convergence of employment and inflation to the fomc's objectives, then increases in the federal funds rate are likely to occur sooner and to be more rapid than currently envisaged. conversely, if economic performance disappoints, increases in the federal funds rate are likely to take place later and to be more gradual. let me now turn to our statement on policy normalization principles and plans. the statement is intended to provide information to the public about the eventual normalization process. it does not signal a change in the current or future stance of

monetary policy. as is always the case in setting policy, the fomc will determine the timing and pace of policy normalization so as to promote its statutory mandate of maximum employment and price stability. since the crisis, the federal reserve has been providing extraordinary accommodation using nontraditional tools of monetary policy. the fomc's intention has always been to return to a more traditional approach, and throughout this period the committee has been preparing for the normalization process. in june 2011 the committee set out some broad principles and some more specific tactics for how it envisioned the normalization process to take place. in june 2013 we noted the conditions had changed

significantly in ways not anticipated in june of 2011, including the size and composition of the fed's balance sheet and that some revision of those earlier plans was appropriate. the document released today reflects our updated plans which readers of our minutes will know have been under discussion for the last few fomc meetings. the new approach retains many broad objectives and principles from the original but also has some new elements. as was the case before the crisis, the committee intends to adjust the stance of monetary policy during normalization primarily through actions that influence the level of the federal funds rate and other short-term interest rates, not through active management of the balance sheet. the federal funds rate will

serve as the key rate to communicate the stance of policy. to begin normalization, the committee will raise its target range for the federal funds rate. the committee expects that the effective federal funds rate may vary within the target range and could even move outside of that range on occasion, but such movement should have no material effect on financial conditions or the broader economy. the primary tool for moving the federal funds rate into the target range will be the rate of interest paid on excess reserves or ioer. the committee expects that the federal funds rate will trade below the ioer rate while reserves are so plentiful as is the case at present. the committee also intends to use an overnight reverse repurchase agreement facility

which by transacting with the broad set of counterparties will help insure that the federal funds rate remains in the target range. i'd like to emphasize that the overnight rrp facility will only be used to the extent necessary and will be phased out when no longer needed to help control the federal funds rate. in addition, the committee will adjust the particular settings of these tools as needed and could deploy other supplementary tools as well to insure that we achievement and our desired stance of policy. turning now to our plans regarding the fed's balance sheet, the committee intends to reduce securities holdings in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal on securities held in the system open market account.

regarding the timing for ceasing reinvestments, the committee now expects this to occur after the initial increase in the target range for the federal funds rate. the committee currently does not anticipate selling agency mortgage-backed securities as part of the normalization process. although limited sales might be warranted in the longer run to reduce or eliminate residual holdings. the timing and pace of such sales would be communicated to the public in advance. it's the committee's intention that the federal reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently is and effectively and that these securities will primarily consist of treasury securities. as i stated earlier, today's

release of the committee's updated normalization plans is in no way intended to signal a change in the stance of monetary policy. rather, it is meant simply to provide information about how the committee envisions the normalization process in light of the changes in economic and financial circumstances that have occurred since we put forth our original plans more than three years ago. that said, conditions could change further, and we will learn about our tools during normalization. the committee has agreed that it is prepared to make additional adjustments to its normalization plans if warranted by economic and financial developments. thank you. let me stop there, i'll be happy to take your questions. >> [inaudible] >> thank you. chair yellen, there was some

debate going into this meeting about the phrase "considerable time" whether it would remain in the statement. i want to know if you could just tell me a couple things about it. first, was it debated at the fomc as whether or not it should be included? and i'm sorry we've been over this before, what does it meantime wise? i have just a couple more here. finally, how do you square this idea of a date when you and others on the fomc have continuously said that you're data dependent to the point where if the data were to turn, would it not necessarily be a considerable time until you raise rates? thank you. >> so, of course, the committee discussed its forward guidance today, and it discusses what the appropriate forward guidance is at every meeting. this is part of our assessment of economic conditions and the appropriate stance of monetary policy.

i -- in terms of what the term considerable time means, the committee decided that based on its assessment of economic conditions that characterization remains appropriate, and it was comfortable with it. i think if you look, for example, at the projections of individual participants that are revealed in the sep, well, that's the view of each participant and, again, i'd emphasize not a committee, a committee collective view. there is relatively little change in the assessment of the outlook by participants between this meeting and the assessment in june. so the outlook is little changed. a slight decline in the anticipated path of the

unemployment rate and a very slight uptick in the inflation projection but really quite minimal. so the outlook hasn't changed that much from june is, and the committee felt comfortable with this characterization. now, you said isn't this calendar-based guidance? i want to emphasize that there is no mechanical interpretation of what the term "considerable time" means, and as i've said repeatedly, the decisions that the committee makes about what is the appropriate time to begin to raise its target for the federal funds rate will be data dependent. and in my opening comments just now, i again emphasized something i've said previously which is that if the pace of progress in achieving our goals were to quicken, if it were to

accelerate, it's likely that the committee would begin raising its target for the federal funds rate sooner than is now anticipated and might raise, might then raise the federal funds rate at a faster pace, and the opposite is also true. if the projection were to change. so there is no fixed mechanical interpretation of a time period. i think it would not be accurate to describe the committee's guidance about the timing of the federal funds rate and when it will move above zero as being calendar-based. the committee has started with a broad, general statement of what determines how long it will keep the federal funds rate target at zero. it has said that it will be looking at the actual and projected pace at which the gaps

between our employment and inflation and our goals for those variables are closing, and then what the committee does at each meeting is after saying that the assessment will take into account many different indicators and take into account inflation pressures and other things, it goes on to provide at that meeting its assessment of the implications of its view of the data at that time. and that assessment really hasn't changed over the last several meetings. the committee, based on its assessment at each meeting, has felt comfortable saying that based on its assessment of those factors, it considers that it will be likely appropriate to maintain the current target range for a considerable time after the asset purchase program ends, especially if inflation

remains the 2% objective. so i wouldn't describe that as -- i know "considerable time" sounds like it's a calendar concept, but it is highly conditional, and it's linked to the committee's assessment of the economy. >> [inaudible] >> thank you. al howard with reuters and thank you. so if you would help us, i mean, square the circle a little bit because having kept the guidance the same, having referred to senate underutilization of labor, having actually pushed gdp projections down a little bit yet the rate path gets steeper and seems to be consolidating higher, so if it's data-dependent, what accounts for the faster projections on rate increases if the data aren't move anything that correction concern moving in that direction? >> -- moving in that direction? >> well, the growth projections for 2014 are down a little bit, but the unemployment path is

also marginally lower. so while the projected path of the labor market, unemployment and other measures of the labor market, of course, is partly dependent on the growth outlook, it isn't totally tent on the growth -- dependent on the growth outlook, and the committee assesses the labor market is continuing to improve, and you see a small reduction in the path of the unemployment this year and then over the rest of the projection period. so if you ask me, you ask me why is the projected funds rate path moved up, well, you know, each participant knows the reason they wrote down what they did. but as a guess, i would hazard, first, i would say there is relatively little upward movement in the path, and i would view it as broadly in line

with what one would expect with a very small downward reduction in the path for unemployment and a very slight upward change in the projection for inflation. so most participants in deciding on the path, i think, look at as our guidance says how large is the gap between performance of the labor market and that associated with our maximum employment objective, how large is the gap between inflation and our 2% objective, how fast will those gaps change. and you see in the projections very modest reductions in the size of those gaps. and modest, very small change of a slightly faster pace at which those gaps would change. i would describe the change in

the projections both for the economy and the past of rate -- path of rates as quite modest. but the fact that they move does illustrate the data-dependence principles that i think is really so important for market participants to keep in mind that what we do will depend on how the data unfolds. there's uncertainty about that, and as expectations and the actual performance of the economy change, you should expect to see movements in the dots. i think it's also notable that the further you go out in the projection period, the wider the set of dots. you see a big range out in 2017, and that reflects in part different forecasts by different members of the committee about how rapid progress will be. what you don't see in the

so-called dot plot is also the uncertainty that each individual, each participant sees around their own projection. so things will depend on how the economy evolves. that will change over time, and there's a great deal of uncertainty associated with it. >> we'll go to chris and then to john. >> thank you, madam chair. chris contin, bloomberg news. madam chair, the economy has been growing now for five years, and some economists be expansion will last another five years. why, in your view, is economic growth not creating more inflation and wages and in pce? is this all about remaining slack in the labor market, or are there other forces at play? >> well, to my mind, the very slow pace of wage increases does reflect slack in the labor

market. we had a very deep recession as is, perhaps, to be expected in the aftermath of a very significant financial crisis. we've faced headwinds in the economy recovering, so the recovery has been slow. growth has been positive, and it's lasted for five years, but it's nevertheless been slow relative to past recoveries that have not been associated with financial crises. and while up employment has -- unemployment has come way down from the slightly over 10% level it reached, at 6.1% it remains significantly above the levels that most fomc participants would regard as consistent with

normal in the longer run, 5.2-5.5%. so there is significant underutilization of labor resources. we continue to discuss whether or not the unemployment rate itself is in an adequate measure of how much underutilization of labor resources there really is. and as i went into detail in jackson hole and won't repeat all of that there, there are other ways in which we see underutilization, high levels that have come down only very marginally of part-time employment for economic or involuntary part-time employment. perhaps some remaining shortfall of labor force participation as a result of cyclical factors. and so i think there still is, and the statement says