This asymmetry suggests its appropriate to be more cautious in raising our federal funds rate than would be the case if shortterm nominal Interest Rates were appreciably above zero. Reflecting these concerns we have maintained our current policy stance even as the labor market has improved appreciably. However we must also take into account the welldocumented effect of Monetary Policy. Were the fomc to delay the policy normalization for too long we would like he likely end up having relatively abrupt rates to keep the economy from significantly overshooting both of our goals. Such an abrupt tightening would risks disrupting Financial Markets and perhaps temperament percy economy into recession. Moreover holding the federal funds rate in its current level for too long could also encourage fixed since it was taking and undermine financial stability. On balance, economic and Financial Information received since our october meeting has been consistent with our expectations of continued improvement in the labor market. And as i have noted continual improvement in the labor market help strengthen confidence that inflation will move back towards the objective over the medium term. That said, between today and the next fomc meeting we will receive Additional Data that bear on the Economic Outlook. These data include a range of indicators regarding the labor market, inflation and economic activity. When my colleagues and i meet we will assess all of the available data and implications to the Economic Outlook in making our policy decisions. As you know, there has been considerable focus on the first increase in the federal funds rate after nearly seven years in which that rate has been at its effective lower we have tried to be as clear as possible about the consideration that will affect that decision. Of course even after the initial increase in the federal funds rate, Monetary Policy will remain accommodative and it bears emphasizing that what matters to the Economic Outlook are the public expectations concerning the path of the federal funds rate over time. Its those expectations and influence spending and investment decisions. In this regard the committee anticipates that even after employment and inflation are new mandate consists of levels Economic Conditions made for sometime warrant keeping the federal funds rate below levels the committees use as normal and the longerrun. This expectation is consistent with an implicit assessment that is a neutral nominal funds rate defining the value of the federal funds rate that would be neither expansionary nor contractionary if the economy were operating there is potential, but that rate is currently low by historical standards. Its likely to rise only gradually over time. One indication that the neutral funds rate is unusually low is that u. S. Economic growth has been quite modest in recent years despite the very low level of the federal funds rate and the Federal Reserve of Large Holdings of longerterm security. Had the neutral rates than running closer to the financial crisis, current Monetary Policy settings would then expected to foster very graphic economic expansion with inflation like a rising significantly above the objective. Empirical support and judgment that the neutral federal funds rate is low comes from both Academic Research and Federal Reserve staff analysis. This figure employs for macroeconomic models despise Federal Reserve staff to estimate the natural real rate of interest which is a concept closely related to the neutral rate. The measures of the natural rate shown in this figure represent the real or inflationadjusted shortterm Interest Rates that would prevail and they restrictions that slows the wages and prices to changes in the economy. Under a variety best assumptions being just rate has been shown to be, to promote full employment. The shaded and represents a range of estimates of the natural real rate at each point in time. This analysis suggests that the natural real rate fell sharply with the onset of the crisis and has recovered only partially. These findings are broadly consistent with those reported in a recent paper by Thomas Laubach and John Williams which is shown in this figure. The marked decline in and should should neutral federal funds rise at after the crisis may be partially true visible to a range of persistent economic headwinds to the aggregate demand. These headwinds include underwriting standards and limited access to credit for some borrowers. Deleveraging by many households of debt burdens contractionary fiscal policy at all levels of government, regrowth of broad coupled with significant appreciation of the dollar, lower productivity and Labor Force Growth and elevated Economic Outlook. As we restrain from these headwinds further i anticipate the neutral federal funds rate will gradually move higher over time. Indeed in september most fomc participants projected that in the long run the nominal federal funds rate would be near 3. 5 and this is sexual federal funds rate would rise to that level fairly slowly. Because the value of the neutral federal funds rate is not directly measurable it must be estimated based on our imperfect understanding of the economy and the available data. I would stress the considerable uncertainty of estimates at the current levels and even more to its like we path Going Forward. That said we will learn more from reserving Economic Development summit. Not bad. It is thereby important to emphasize the actual path of Monetary Policy will depend on how im incoming data affects the evolution of the Economic Outlook. Stronger growth for a more rapid increase in inflation than we currently anticipate with a chance at the neutral federal funds rate is widening more quickly than expected making it appropriate to raise the federal funds rate more quickly as well. Conversely if the economy disappoints the federal funds rate would like he rise more slowly. Given the persistent shortfall in inflation from her 2 objective the committee will of course carefully monitor actual progress toward our inflation goal as we make decisions over time on the appropriate path to the federal funds rate. So in closing, i would like to begin thinking the Economic Club of washington for this opportunity to speak about the economy and Monetary Policy. The economy has come a long way towards the fomc objectives maximum employment and price stability. When the committee begins to normalize its stance on policy doing so will be a testament also to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession and in that sense it is the day that i expect we are all looking forward to. Thank you. [applause] thank you very much for those comments. We have time for a few questions and let me start by asking you about quantitative easing. When quantitative easing was begun to do expect it would be in effect for such a long period of time and what do you think the fed might have done differently in hindsight . Quantitative easing was a policy that we adopted when the economy was weak in the aftermath of sequestered and we had already issued the funds rate to zero. Open wanted to do was to see if it was possible to push down longerterm Interest Rates so we had to check largescale purchases in both treasury and mortgagebacked securities and i think the impact of those purchases was to push down longerterm rates. We did that in conjunction with another policy which was to offer Forward Guidance concerning the likely path of shortterm rates. I think markets at the time and the public thought it wouldnt be very long and now we know its been seven years. They thought it wouldnt be very long before shortterm rates were rising and in conjunction with those longterm asset purchases discussing the fact that we thought it would be a long time before it would be appropriate to reach term rates. Both would push down longerterm rates and i do think congress was effective. They sell the yields on treasury borrowing rates went down acrosstheboard after prices moved up. Stock market prices and housing prices and that helped to boost active spending and to check this Inflationary Pressure that could conceivably lead to disinflation. We are not the only country that undertook such policies. The u. K. And more recently have been engaged in japan and in similar kinds of asset purchases europe there have been studies in all the countries and they show essentially similar results. These policies were effective. I these policies were effectiv. I think the asset purchase that we undertaken a very large effect. I think its probably because Financial Markets were very stressed at the time and our purchases really seen in the turbulent environment. Over time we scale back our estimates of the effect somewhat i still think its effective and to give you a sense of one pretty recent studies suggest that if we hadnt undertaken those purchases we probably now would have an Unemployment Rate over 6 so that might be an indication of what was accomplished. I do think the policy was effective what i have done anything differently . I think we have learned that our first couple of programs have fixed quantities as we announced we would purchase certain kinds of securities. Our Second Program for example was marketed at 600 million. Our Third Program which was to make it openended to hire purchases or goals. We would then do more or vice versa so i think i wouldnt say i regret what you did but i think the third approach is effective. When you are an economist he said transparency wasnt and under ben bernanke endoftheyear transparency has become more common so in hindsight do you think transparency is as much of a virtuous he thought at the time that you joined the fed is the vice chair do you think the old days are better . I would say just after i became a governor in august of 94, february of 1994 was the First Time Ever to my knowledge in its history that the fed announced a change publicly made the announcement that there had been a change in policy after the decision was made at a meeting to do that to Alan Greenspan thought for the first time in many years the committee was going to raise rates from the 3 level that they were at a 94 and it was important to actually tell the world that such a decision had been made rather than rallying people to movement into the money markets. Its been a long road since then with ever Greater Transparency. Its definitely something i support. I think its been a virtue and i think we have made very important strides in becoming more transparent. Is important for two different reasons. First of all we are an independent central bank, have a great deal of impact on the economy and in a Democratic Society especially the independent organization like ours has the duty to explain his actions to people and also to their elected representatives in congress. So now we have this conference is four times a year. The present Economic Projections we have speeches and congressional testimony and possibly more. Something we have done that i think has been very effective and is important is that in 2012 the committee for the first time agreed to an exclusive statement concerning our Monetary Policy goals and strategies and in it we articulated our interpretation of price stability which is the inflation rate according to the pc eight price index. In conjunction with that statement of holes and heres how we will manage tradeoffs, we also offer every Month Committee white statement blacked each individual we publish an individual forecast both Economic Forecast and policy assumptions to be used for participants is what would be an appropriate policy to accomplish that path of the economy that they are projecting. In a sense that is the Committee White statement of complicit goals and strategies and here is the view on the part of participants of how we think the economy will evolve and how policy will evolve with it. In a way a fullblown game plan for conducting Monetary Policy. Bobby think it is the Greater Transparency that some people running for president were republicans and some members of the congress who are republicans dont seem to like the fed that much and they want to have legislation that constrains what you do now . Is that a concern to you and why do you think you have this concern by certain people of that party . Well let me just say the Federal Reserve is a nonpartisan institution. We are accountable for congress. We take our responsibilities for that accountability seriously. There are members of congress not only republicans but democrats as well who have proposed a variety of ideas both publicly and in draft legislation as well as privately about changes that should be made about how the Federal Reserve operates. It is up to congress. We are a creature of congress and established by congress with legislation and it is up to congress to consider if changes are appropriate. We have dialogue with members of congress on both sides of the aisle in the house and in the senate. There are are members often come to us and ask us and we provide feedback on their views were legislation that they have in mind. Another has been a push in congress among some members for what sounds like Greater Transparency. This in particular, i always offer my views about when im asked by members of congress about particular legislation. I say for transparency i think ive said repeatedly it but i would like to say again here that the fed is audited and it isnt about the Financial Statements or public accountants. The board in the Federal Reserve banks are all audited. What this is about is and there are members of congress who would like to see diminished independence in Monetary Policy and its something i strongly oppose. I think countries, not on the United States in the 70s when one of my predecessors, chairman volcker had that strong actions to bring inflation down and similar things occurred around the world, a central bank that is able to make tough decisions and not to project shortterm political pressures. We have learned in modern times results in better economic outcomes. Speaking of transparency i know we have it though beating a few weeks. Would you like to give a more precise hand what they might do but if you dont reuse in your remarks that whatever the fed might do they have no that might do it consistently for a number of years so in other words the last time the fed increased Interest Rates in 2004 to 2006 the data fairly consistently. It moved fairly consistently to the year. Would you probably do Something Like that again . I appreciate you asking that question because i think its important for me to emphasize that there is no such plan. What we do, if we decide to raise rates after that, there is no plan to proceed over time and some mechanical or calendarbased way. Actual shortterm rates will follow and will depend entirely on how incoming data influences our assessment of the outlook. The first step does not mean to disembark on some predetermined path of regular moves. Because i noted in my remarks recovery from the financial crisis has been very slow. The socalled natural rate of increase that i talked about appears to be quite low and we dont really know where its going to go. We think its going to rise over time. This really may turn out to be a very different cycle in past cycles that i would point out we are producing the dash published every three months projections of all of the fomc participants of policies that they would regard as appropriate if the economy evolves in line with expectations. Looking at that to get a sense of what Committee Members are roughly expecting is likely to happen. I think its fair to say that most fomc participants do anticipate a series of interestrate increases but they anticipate that they would be gradual and their view is the economy would continue to grow. Would have whatever the fomc does he feel it has to be unanimous or do you need to have a twothirds 13 or do you have to count heads to get the votes . What kind of policy do you have in terms of Going Forward . Do you want to have unanimous view . I think one of the terms of the federal open Market Committee was this was the design of the Federal Reserve by congress that you have got a range of views on the table. Especially important points when policy decisions are made. The public should expect there are range of views. I think falling into a pat