governors of the federal reserve system ( 2020 ), fed listens : perspectives from the public ( washington : board of governors, june ), https : / / www. federalreserve. gov / publications / files / fedlistens - report - 20200612. pdf. see juan salgado ( 2019 ), remarks for panel 1, “ what does full employment look like for your community or constituency? ” at the fed listens conference on monetary policy strategy, tools, and communication practices, held at the federal reserve bank of chicago, june 4, available on youtube at https : / / www. youtube. com / watch? v = mf - gnagooa0. see lael brainard ( 2019 ), “ is the middle class within reach for middle - income families? ” speech delivered at “ renewing the promise of the middle class, ” 2019 federal reserve system community development research conference, washington, may 10, https : / / www. federalreserve. gov / newsevents / speech / brainard20190510a. htm. - 6targeting ( fait ) is a consequential change in strategy. by committing to seek inflation that averages 2 percent over time, fait means that appropriate monetary policy would likely aim to achieve inflation moderately above 2 percent for a time to compensate for a period, such as the present, when it has been persistently below 2 percent. 13 consistent with this, i would expect the committee to accommodate rather than offset inflationary pressures moderately above 2 percent, in a process of opportunistic reflation. flexible average inflation targeting is a pragmatic way to implement a makeup strategy, which is essential to arrest any downward drift in inflation expectations. 14 while a formal average inflation target ( ait ) rule is appealing in theory, there are likely to be communications and implementation challenges in practice related to timeconsistency and the mechanical nature of such rules. analysis suggests it could take many years with a formal ait rule to return the price level to target following a lowerbound episode, and a mechanical ait rule is likely to become increasingly difficult to explain and implement as conditions change over time. 15 in contrast, fait is better suited for the highly uncertain and dynamic context in which policymaking takes place. in my mind, the commitment to undertake a review of the new strategy and goals in roughly five years is a necessary complement to the flexibility embedded

for release on delivery 1 : 00 p. m. edt september 1, 2020 bringing the statement on longer - run goals and monetary policy strategy into alignment with longer - run changes in the economy remarks by lael brainard member board of governors of the federal reserve system at “ how the fed will respond to the covid - 19 recession in an era of low rates and low inflation, ” an event hosted by the hutchins center on fiscal and monetary policy at the brookings institution washington, d. c. ( via webcast ) september 1, 2020 i want to thank david wessel for hosting this event. it is an honor to be here with ben bernanke and janet yellen, who pioneered the original statement on longer - run goals and monetary policy strategy in 2012. it is a pleasure to discuss the new statement, unanimously approved by the federal open market committee ( fomc ) last week. 1 by bringing our longer - run goals and strategy into alignment with key longer - run changes in the economy, the new statement will strengthen our support for the recovery. in my view, the new statement breaks important ground and will serve the country well as we respond to the economic repercussions of the covid - 19 crisis. key longer - run changes in the economy three related features of the economy ’ s new normal called for the reassessment of the committee ’ s longer - run goals and strategy. 2 first, the equilibrium interest rate has fallen to low levels, which implies a large decline in how much we can cut interest rates to support the economy. 3 that was abundantly clear in march, when we were able to cut i am grateful to ivan vidangos and john roberts of the federal reserve board for helpful discussions. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the fomc. see the board ’ s website for the new statement at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals. pdf. information about the review of monetary policy strategy, tools, and communications is available at https : / / www. federalreserve. gov / monetarypolicy / review - of - monetary - policy - strategy - tools - andcommunications. htm. see jerome h. powell ( 2019 ), “ monetary policy : normalization and the road ahead, ” speech delivered at