in february, i expressed the hope that we would complete the volcker rule by the end of this year. since that time, there has been good interagency progress, and i maintain both the hope and expectation of five months ago. the derivatives push - out provision in section 716 of the dodd - frank act generally prohibits the provision of federal assistance, such as fdic deposit insurance or federal reserve discount window credit, to swap dealers and major swap participants. the provision becomes effective on july 16, 2013, although the statute provides insured depository institutions the right to request a two - year extension from their primary federal supervisor. last month, the federal reserve issued an interim final rule that clarified that uninsured u. s. branches and agencies of foreign banks will be treated in the same manner as insured depository institutions under section 716 and, as a result, will qualify for the same exemptions and two - year transition period available by statute to u. s. insured depository institutions. the interim final rule also establishes the process for state member banks and uninsured state branches or agencies of foreign banks to apply to the federal reserve for transition relief. 4 although the rule is already effective, we are seeking comments on it and will revise the rule, as necessary, in light of comments received. oversight of community banks in addition to overseeing large banking firms, the federal reserve supervises approximately 800 state - chartered community banks that are members of the federal reserve system. 5 community banks play an important role in extending credit in local economies across the country – particularly, though by no means only, in their lending to small and medium - sized businesses. recognizing the disproportionate burden that regulatory compliance can impose on smaller institutions, the federal reserve has put in place special processes for taking account of the circumstances and more limited compliance resources of community banks, while still achieving safety - and - soundness aims. we created a special subcommittee of our regulatory and supervisory oversight committee to review all proposals with an eye to their effects on community banks. we have also established a community depository institutions advisory council to enable community bankers to comment on the economy, lending conditions, supervisory policies, and other matters of interest. the changes we will be seeing in the financial regulatory architecture as a result of the doddfrank act and basel iii are principally directed at our largest and most complex financial firms. many of the basel iii requirements will not apply to smaller banks – including the countercy

december, a touch below the fed ’ s 2 percent objective. after assessing the recent data, my take is that the current shortfall in inflation from target as most likely due to transitory factors that will fade through 2018, pushing inflation back up to target. suffice to say, a deviation from our target of a few tenths of 1 percentage point, especially one i expect to fade, does not cause me great concern. against this economic backdrop, with a strong labor market and likely only temporary softness in inflation, i view it as appropriate that monetary policy should continue to be gradually normalized. an important component of this normalization was initiated in october, when we started to gradually scale back our reinvestment of proceeds from maturing treasury securities and principal payments from agency securities. with the balance sheet normalization plan set to remain on autopilot, barring a material deterioration in the economic outlook, the federal funds rate remains our primary tool for adjusting the stance of monetary policy. at our january meeting, the federal open market committee decided to maintain its target range for the federal funds rate between 1 - 1 / 4 percent and 1 - 1 / 2 percent. 2 in this range, monetary policy remains accommodative. i anticipate further gradual increases in the policy rate will be appropriate to both sustain a healthy labor market and stabilize inflation around our 2 percent objective. of course, it should go without saying that i will keep a close eye on economic indicators — and their implications for the outlook for inflation and real activity and adjust my views on appropriate monetary policy accordingly. i would like to wrap up with a word on the financial sector. the federal reserve and our colleagues at other agencies have now spent the better part of the past decade building out and standing up the post - crisis regulatory regime. at this point, we have completed the bulk of the work of post - crisis regulation. as such, now is an eminently natural and expected time to step back and assess those efforts. it is our responsibility to ensure that they are working as intended, and — given the breadth and complexity of this new body of regulation — it is inevitable that we will be able to improve them, especially with the benefit of experience and hindsight. 1 the views i express here are my own and not necessarily those of the federal reserve board or the federal open market committee. 2 see board of governors of the federal reserve system ( 2018 ), “ federal reserve issues fomc statement, ”