our review progresses. of course, we may find that the preferred approach is modest enhancements to the tools that proved their worth during the crisis. listening now, how does today ’ s event fit into all of this? just as the federal reserve bank of richmond is sponsoring today ’ s event with representatives of its local community, so too are other reserve banks sponsoring similar events. we are making sure to hear from people across the country. we will also hold a national - level conference in chicago in june. and, in addition to presentations from prominent outside experts, we made sure to add panels to hear from community organizations, training institutions, and other groups that can give us insights on how monetary policy is affecting main street. since i arrived at the fed, i have put a premium on visiting communities all over the country to get a direct sense of how they are experiencing the economy. in fact, my first such visit was in this district with community development staff from the federal reserve bank of richmond. due to the wisdom of the fed ’ s original architects, the federal reserve system derives tremendous value from interacting with communities from all around the country. in 2015, we created a community advisory council at the federal reserve board, where we hear from a broad variety of community groups and others. and many of the regional federal reserve banks have similar councils, including the richmond fed ’ s community investment council. in our review this year, we are listening broadly and are seeking perspectives at the community level. so today we want to hear from you. how is your community experiencing today ’ s economy? is everyone who wants a job able to get one? can they get the necessary training? are businesses finding it relatively easy to hire the workers they need? what about inflation and pricing power? and what about the availability and cost of credit — whether it be to start or expand a small business, buy a car to get to work, or invest in owning a home or getting a degree? i look forward to hearing your views on these and other questions. 1 i am grateful to john roberts of the federal reserve board for his assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 janet l. yellen, “ revolution and evolution in central bank communications, ” remarks at the haas school of business, university of california, berkeley, berkeley, california, november 13, 2012. richard h. clarida, “

are a few key features of that new normal. for example, interest rates have stayed very low in recent years not only in the united states, but also in many other advanced economies. for a variety of reasons, it seems likely that equilibrium interest rates will remain low in the future. low interest rates present a challenge for the traditional ways of conducting monetary policy. that is especially true in recessions when, in the past, the federal reserve has typically cut interest rates by 4 to 5 percentage points in order to support household spending and business investment. but when equilibrium interest rates are low, we have less room to cut interest rates and thus less room to buffer the economy using our conventional tool. for example, following the most recent recession in 2008 and 2009, we kept interest rates as low as the committee thought they could go, which was close to zero, for many years. 1 / 3 bis central bankers'speeches another big change in the economy is that inflation doesn ’ t move as much with economic activity and employment as it has in the past. this is what economists mean when they say the phillips curve is very flat. in many ways, the flatter phillips curve has advantages : it means that the labor market can strengthen a lot and pull many workers that may have been sidelined back into productive employment without an acceleration in inflation, unlike what we saw in the 1960s and 1970s. similarly, inflation doesn ’ t fall as much in recessions. but there is an important risk with today ’ s low sensitivity of inflation to slack : it makes it more difficult to boost inflation to our objective of 2 percent on a sustainable basis. and, as we know from other countries, if inflation consistently falls short of the central bank ’ s objective, lower inflation tends to get embedded in people ’ s expectations. expectations that inflation will remain low in turn can create a self - fulfilling dynamic with actual inflation, making it even more difficult for the central bank to boost inflation. and because inflation is reflected in nominal interest rates, that, in turn, can also reduce the amount of policy space the central bank has available to prevent the economy from slipping into recession. in fact, in recent years, central banks around the world have had to use a larger variety of policy tools than they traditionally used to respond to the financial crisis and support economic expansion. some issues to explore given the new normal of low equilibrium interest rates and low sensitivity of inflation to slack, it is prudent to assess how well various approaches worked both