Yellen Excerpt: Transitory Factors Holding Inflation Down

     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:

     The fed said inflation should be transitory, are you confident that will

still be the case particularly regarding wage gains, they have been moderate in

recent months. Yet the economy is growing and confidence is high. Is there

something going on in the economy that is making it difficult for businesses to

raise wages? 

Yellen:

     It is true that incoming wage data suggests only modest upward pressure on

wages. That leads me, that's one factor along with the fact that inflation

remains low with feeling that even though we have a 4.1 percent unemployment

rate, that the labor market is not overheated at this point. Remember the modest

pace of wage gains also probably reflects slow productivity growth. 

     But when you ask me about the outlook for inflation, I've talked in detail

about this in the past, and recognize that there is uncertainty about what's

holding inflation down, but my colleagues and I continue to believe that the

factors that are responsible this year for holding inflation down are likely to

prove transitory. That said, we all agree that our inflation objective is

extremely important. 

     We recognize that there's been a prolonged shortfall. This is a symmetric 2

percent inflation objective, and we continue to indicate that we will be

monitoring inflation developments closely. So this is on the horizon, and

recognized to be one of the risks facing policy.

--MNI Washington Bureau; +1 202-371-2121; email: holly.stokes@marketnews.com

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