Federal Reserve prepared to lower two big projections

Published June 16, 2014 10:00am ET



At her first press conference in March, Janet Yellen was asked if she would pause the Federal Reserve’s taper if economic growth fell to zero. The Fed chairwoman effectively dodged the question, and she’s probably glad she did, now that she’s likely going to continue the taper despite a quarter of negative growth.

In March, Yellen called the possibility of zero gross domestic product growth “extreme,” but hedged that the key consideration for her in managing the Fed’s large-scale bond purchases was not the headline GDP number but the expectation that employment and inflation were rising.

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