Well, markets look to have made it through Janet Yellen’s “ask-a-Fed-chair” session without incident. Which is good for asset prices, but seems to have frustrated some netizens.
We were waiting on something dramatic, but it never really transpired – unfortunately. As noted here first thing Monday morning, Yellen participated in a University of Michigan event this afternoon where she took questions including queries sent in via Twitter.
Here’s a summary of what Yellen said or, perhaps more accurately, what she didn’t say.
- “To me, lessons from the crisis are first and foremost that the financial system -and a well-functioning financial system — is essential to the economy,” Fed Chair Janet Yellen said, speaking at an event at the University of Michigan.
- “When the short-term funding dried up, we found that we had a financial system that was highly vulnerable to runs”
- “The economy has been growing at a moderate pace, mainly supported by consumer spending,” Fed Chair Janet Yellen said at a University of Michigan event.
“The global economy, which was quite weak, now seems to be operating in a lightly more robust and healthier way”
- “With the economy operating close to our objectives, what we want to make sure of is we sustain the progress that we’ve achieved”
- “The appropriate stance of policy now is closer to what let me call as neutral”
- “Whereas before, we had to press down on the gas peddle trying to give the economy all of the oomph that we possibly could,” now trying to “give it some gas but not so much that we’re pushing down hard on the accelerator.”
- “We think it’s appropriate to gradually raise the federal funds rate toward a more neutral stance” if the economy keeps on track
- “We’ve accomplished a great deal, I think” to make large and systemic banks “safer and sounder,” Fed Chair Janet Yellen said at University of Michigan event.
- “We’ve forced them to hold much more liquidity” and capital
- “Whereas they used to be highly reliant on volatile short- term funding,” that is less true now
- Supervision is “much better, and focused on risks in the financial system as a whole”
- “We do have to be attentive to what’s happening in the shadow banking system, as well”
- “2 percent growth, which isn’t stunning in absolute terms, has generated a lot of jobs,” Fed Chair Janet Yellen said at University of Michigan event.
- “The fact you can create that many jobs in the context of growth that is so low point to significant problem”
- “The problem is that productivity growth is very low. It takes a lot of labor to produce not very much extra output”
- “It looks like that the economy’s potential to grow” is probably a little bit under 2 percent actually
- “Nobody really nows why productivity growth is so low,” making it hard to predict when ti’ll pick up
- Not really sure if policy coordination possible, but “there is close” contact to promote understanding
- “That network of contacts has resulted, I think, in very close coordination and cooperation that’s been important in recent years”
Bloomberg summarizes: “Treasuries held onto gains after late remarks by Federal Reserve Chair Janet Yellen about the economy.” Yields on the 10 fell by two basis points to 2.37 as of 4:47 p.m. in New York.
Ultimately, the Twitterverse was underwhelmed with #fordschoolyellen…