figure 2 in the appendix. - 10 finally, in circumstances where a major central bank is continuing to expand its balance sheet or maintaining a large balance sheet over a sustained period, this policy would likely exert downward pressure on term premiums around the globe, especially in those foreign economies whose bonds were perceived as close substitutes. indeed, until very recently, it had been notable how little long yields moved up in the united states even as discussions of balance sheet normalization have moved to the forefront. this likely reflects at least in part the expectation that ongoing asset purchase programs in other advanced economies would continue holding down long - term yields globally. the tide seems to have turned in recent weeks, as long yields in the u. s. have increased notably on market perceptions that foreign officials are beginning to deliberate their own normalization strategies. i have used a simple stylized model to illustrate circumstances in which the choice of normalization strategies adopted by major central banks can potentially be quite consequential. if anything, the analysis presented here serves to highlight the importance of research assessing this question from both an empirical and theoretical perspective. let me conclude by returning to the policy choices facing central banks. the federal reserve chose to remove accommodation initially through increases in the federal funds rate. in light of recent policy moves, i consider normalization of the federal funds rate to be well under way. if the data continue to confirm a strong labor market and firming economic activity, i believe it would be appropriate soon to commence the gradual and predictable process of allowing the balance sheet to run off. once that process begins, i will want to assess the inflation process closely before making a determination on further adjustments to the federal funds rate in light of the - 11 recent softness in core pce ( personal consumption expenditures ) inflation. in my view, the neutral level of the federal funds rate is likely to remain close to zero in real terms over the medium term. if that is the case, we would not have much more additional work to do on moving to a neutral stance. i will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target. meanwhile, in recent days, we have begun to hear acknowledgement from other major central banks that they too are seeing conditions that suggest policy normalization could be on the table before too long, against the backdrop of a brighter global outlook. as i just discussed, the pace and timing of how central

janet l yellen : commencement remarks speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at new york university ’ s 2014 commencement, new york city, 21 may 2014. * * * thank you, president sexton. on behalf of the honorees, let me express my thanks to nyu. and congratulations from all of us to you, the class of 2014, and to your families, especially your parents. this is a special day to celebrate your achievements and to look forward to your lives ahead. your nyu education has not only provided you with a foundation of knowledge ; it has also, i hope, instilled in you a love of knowledge and an enduring curiosity. life will continue to be a journey of discovery if you tend the fires of curiosity that burn brightly in all of us. such curiosity led eric kandel, here at nyu, to his lifetime goal, to discover the chemical and cellular basis of human memory. a few years after his graduation, he was doing research on cats. but he had the idea of focusing on an animal with a simpler, more fundamental brain : the california sea slug. his colleagues all but ridiculed him for the idea. they “ knew ” that the study of the lowly sea slug was irrelevant for understanding human memory. kandel ’ s surgically - skilled collaborator deserted him. to get up to speed on sea slugs, he had to go abroad to study. but kandel persisted and, in 2000, his curiosity won him the nobel prize. it was, as you must have guessed, for deciphering the chemistry of memory in humans, as revealed by his research on sea slugs. kandel ’ s life, i believe, demonstrates how a persistent curiosity can help us reach ambitious goals, even with great roadblocks in the way. a second tool for lifelong intellectual growth is a willingness to listen carefully to others. these days, technology allows us access to a great breadth of perspectives, but it also allows us to limit what voices we hear to the narrow range we find most agreeable. listening to others, especially those with whom we disagree, tests our own ideas and beliefs. it forces us to recognize, with humility, that we don ’ t have a monopoly on the truth. yankee stadium is a natural venue for another lesson : you won ’ t succeed all the time. even ruth, gehrig and dimaggio failed most of time when they stepped