offset the effect on the neutral rate. with weak domestic demand abroad, further tightening of financial conditions through the exchange rate could lead to some spillover of demand across borders, weighing on u. s. exports, investment, and manufacturing activity and potentially constraining the neutral rate. finally, how strongly monetary policy should react to signs of further progress toward full employment and 2 percent inflation naturally depends on the balance of risks. given the recent improvement in unemployment and inflation and the possibility of increased fiscal stimulus, risks in the domestic economy are closer to being balanced than they have been for some time. while great uncertainty regarding the path of fiscal policy and its economic effects will remain for some time, with the economy getting closer to full employment, the prospect of a material increase in fiscal stimulus over a sustained period could reasonably be expected to shift somewhat greater probability toward stronger inflation outcomes. but risks outside our borders are still tilted to the downside. in particular, despite recent progress, policy space in japan and the euro area is perceived to be very limited, and the euro - area banking sector remains fragile. downside risks are also present in emerging market economies such as china, which faces capital outflow 4 / 6 bis central bankers'speeches pressures and high and rapidly growing corporate indebtedness. with a low u. s. neutral rate, conventional u. s. monetary policy does not have as much room as it did prior to the financial crisis to counter adverse shocks from abroad. conclusion speculation has increased of late about the possibility of a significant fiscal policy shift on the horizon. the effects will depend on the timing, magnitude, and composition of the policies, the extent to which the policies boost aggregate supply relative to aggregate demand, the cyclical position of the economy, and the responses of the dollar and longer - term interest rates, given the fragile global economic environment and projections for the u. s. debt - to - gdp ratio. against this uncertain backdrop, monetary policy will continue to be guided by actual and expected progress toward our goals, the level of the neutral rate, and the balance of risks. a gradual approach will remain appropriate as long as inflationary pressures remain muted, the economy remains short of our objectives, the neutral rate remains low, and downside risks from abroad remain, although this will depend on the fiscal trajectory, as it evolves, and its uncertain effects on the economy and financial markets. references board of governors of the federal reserve system, division of research and statistics ( 2014 )

manufacturing jobs, which were held primarily by men. see brendan price and melanie wasserman ( 2022 ), “ the summer drop in female employment, ” cesifo working paper 9783 ( munich : cesifo, june ), https : / / www. cesifo. org / docdl / cesifo1 _ wp9783. pdf. - 6today, working women still carry out most childcare responsibilities. one study conducted before the pandemic found that when both parents work, women spend 50 percent more time on childcare than men. 10 and when the pandemic closed many schools, it was largely women who stayed home. women with children saw their labor force participation rate and employment - to - population ratio fall more than for women without children, while men were much less affected regardless of whether they had children. according to one federal reserve study, increased caregiving burdens for mothers with school aged children accounted for about three - fourths of the decline in women in the labor force from february 2020 to august 2021 but only about one - third of the decline for fathers. 11 even after most children returned to in - person schooling, caregiving continues to weigh on female participation in the labor force, likely because of increased care for elderly or ill family members. 12 the other major factor affecting women during the pandemic was the larger number of female employees in high - contact service - sector jobs, where demand dropped sharply during the pandemic and the government - imposed restrictions in response to covid - 19. during past recessions, women experienced fewer job losses because servicesector jobs were more stable in downturns. historically, goods - producing industries were harder hit, and men, who tended to hold these roles, were more likely to lose their jobs. 13 but during the pandemic, it was service jobs that were more likely to be lost. before the https : / / www. pewresearch. org / fact - tank / 2015 / 10 / 01 / women - more - than - men - adjust - their - careers - forfamily - life / montes, joshua, christopher smith and isabel leigh. 2021. “ caregiving for children and parental labor force participation during the pandemic. ” feds notes, washington : board of governors of the federal reserve system. montes, smith and leigh ( 2021. ) albanese and sahin - 7pandemic, more