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SP500 PE Ratio vs. CPI Inflation

     WASHINGTON (MNI)  - The following is a response of Federal Reserve Chairman
Janet Yellen to a question from a reporter at her press conference following
Wednesday's Federal Open Market Committee meeting.
     
Question:
     To return back to the prospective tax bill questions, in your view at all
is the Republican tax bill an ill-timed fiscal stimulus, and are you concerned
at all it will wind up squandering the tools the congress and fed have when it
comes time to dealing with the recession? 
     
Yellen:
     So look, I would just say that it is up to the administration and congress
to decide on appropriate fiscal policy, and our job is to maintain our focus on
employment and inflation. 
     We continue to think, as you can see from the projections, that a gradual
path of rate increases remains appropriate, even with most, almost all
participants now factoring in their assessment of the impact of the tax policy. 
     It is projected that the tax cut package will lead to additions to the
national debt and boost by the end of the horizon the debt to GDP ratio. And I
will say, and this is nothing new, it's something I've been saying for a long
time, I am personally concerned about the U.S. debt situation. It's not that the
debt to GDP ratio in the, at the moment, is extraordinarily or worrisomely high.
But it's also not very low. 
     It's projected as the population continues to age and the baby-boomers
retire, that that ratio will continue to rise in a unsustainable fashion. 
     So, the addition to the debt, taking what is already a significant problem
and making it worse, it is of concern to me. And I think it does suggest that in
some future downturn, which could occur just for whatever reason, the amount of
fiscal space that would exist for fiscal policy to play an active role, it will
be limited, may well be limited.
--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com
[TOPICS: MMUFE$,M$U$$$]