conditions, be held “ lower for longer ” than conventional policy rules imply. i see these ideas reflected in the fomc ’ s recent policy. since september 2012, the fomc has stated that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. since december 2012, the committee has said it intends to hold the federal funds rate near zero at least until unemployment has declined below 6 - 1 / 2 percent, provided that inflation between one and two years ahead is projected to be no more than 1 / 2 percentage point above the committee ’ s 2 percent longer - run goal, and longer - term inflation expectations continue to be well anchored. i believe that the clarity of this commitment to accommodation will itself support spending and employment and help to strengthen the recovery. asset purchases have complemented our forward guidance, and the many dimensions of different purchase programs arguably constitute “ many instruments. ” in designing a purchase program, one must consider which assets to buy : just treasury securities or agency mortgage - backed securities as well? which maturities? the federal reserve, the bank of england, and, more recently, the bank of japan have emphasized longer - duration securities. at what pace should the securities be purchased? and how long should they be held once purchases cease? each of these factors may affect the degree of accommodation delivered. two innovations in the fomc ’ s current asset purchase program, for example, are that it is open - ended rather than fixed in size like past programs, and that the overall size of the program is explicitly linked to seeing a substantial improvement in the outlook for the labor market. in these brief remarks, i won ’ t thoroughly review the benefits or costs of our highly accommodative policies, emphasizing only that i believe they have, on net, provided meaningful support to the recovery. but i do want to spend a moment on one potential cost – financial stability – because this topic returns us to the theme of “ many targets ” for central banks. as chairman bernanke has observed, in the years before the crisis, financial stability became a “ junior partner ” in the monetary policy process, in contrast with its traditionally larger role. the greater focus on financial stability is probably the largest shift in central bank objectives wrought by the crisis. some have asked whether the extraordinary accommodation being provided in response to the financial crisis may itself tend to generate new financial stability risks. this is a very important question. to

put it in context, let ’ s remember that the federal reserve ’ s policies are intended to promote a return to prudent risk - taking, reflecting a normalization of credit markets that is essential to a healthy economy. obviously, risk - taking can go too far. low interest rates may induce investors to take on too much leverage and reach too aggressively bis central bankers ’ speeches for yield. i don ’ t see pervasive evidence of rapid credit growth, a marked buildup in leverage, or significant asset bubbles that would threaten financial stability. but there are signs that some parties are reaching for yield, and the federal reserve continues to carefully monitor this situation. however, i think most central bankers view monetary policy as a blunt tool for addressing financial stability concerns and many probably share my own strong preference to rely on micro - and macroprudential supervision and regulation as the main line of defense. the federal reserve has been working with a number of federal agencies and international bodies since the crisis to implement a broad range of reforms to enhance our monitoring, mitigate systemic risk, and generally improve the resilience of the financial system. significant work will be needed to implement these reforms, and vulnerabilities still remain. thus, we are prepared to use any of our many instruments as appropriate to address any stability concerns. let me conclude by noting that i have touched on only some of the important dimensions of monetary policy targets and instruments that have arisen in recent years. i look forward to a discussion that i expect will explore these issues and perhaps raise others. bis central bankers ’ speeches