Yellen: Fed Funds Rate Needs to Rise Gradually Over Time

The transcript discusses the current stance of monetary policy, emphasizing its stimulative nature and the need for gradual adjustments to the federal funds rate. It highlights the importance of maintaining a modestly accommodative policy to support labor market improvements and achieve the 2% inflation target. The neutral rate is explored, noting its low level by historical standards. The transcript also addresses the risks associated with low inflation and the constraints on conventional monetary policy, suggesting that gradual reduction in policy accommodation is appropriate as labor market conditions strengthen.

What potential risks are associated with the constraint on conventional monetary policy?

What conditions would lead to a gradual reduction in the degree of monetary policy accommodation?