Are Yellen and the White House on a collision course?

The press conference was actually more interesting than the decision itself, which was widely expected and well telegraphed by the Federal Reserve, but the chairman insisted on two elements which are worthy of attention.

First, even if Ms Yellen has made the assessment that the cycle has improved, it seems the long-term prospects remain as before. The neutral level of interest rates (broadly the rate of interest which keeps the economy in equilibrium) remains at a historically low level. There was no link drawn between a potential fiscal stimulus and the long-term potential of the economy. Indeed, the infrastructure plan, as well as cuts in the corporate tax rate, could only marginally improve the productivity factor and do nothing to change the demographics of the United States. These are the key points...