##mediaries – through which the effects of monetary policy flow to the real economy – find themselves at a crossroads. starting in august, my fellow fed policymakers and i persistently subjected ourselves to the age - old dialectic in determining the breadth and depth of our policy response : what do we know? what do we think we know – that is, what do we suspect? what can't we know? and, perhaps most important, in light of various forms of uncertainty : what should we do about it? the more we asked ourselves these questions during this period of extraordinary tumult, the more we recognized the need to broaden our policy response beyond monetary policy's blunt traditional tool. changes in the policy rate affect many sectors, not just those that seem out the opinions i am expressing are my own and do not necessarily correspond with those of my colleagues on the board of governors or the federal open market committee. nellie liang and dave reifschneider, of the federal reserve board's staff, provided valuable contributions to these remarks. milton friedman ( 1968 ), " the role of monetary policy ", american economic review, vol. 58 ( march ), pp. 117 ; edmund s. phelps ( 2008 ), " our uncertain economy ", wall street journal, march 14. of balance. charlie munger, the under - heralded partner of the " oracle of omaha, " warren buffett ( perhaps comprising the finest investment team of the last half - century ), believes that economics remains a rather insular field of practice. he seems to delight in accusing the economics profession of suffering from " man with a hammer syndrome. " he recounts, " [ t ] o the man with only a hammer, every problem looks pretty much like a nail. " 3 i suspect munger feels similarly about the orthodoxy of monetary policy. consistent with munger's admonition, the fed saw it necessary to expand our toolkit beyond the proverbial hammer of the policy rate in the last nine months. and as i discussed in remarks last month, the fed's nontraditional policy response included the use of innovative liquidity tools to counter the market turmoil and improve the functioning of financial and credit markets. 4 in my remarks today, i would like to discuss the use of the hammer – the setting of the federal funds rate – particularly in extraordinary times. of course, determining the proper level of the federal funds rate is rarely simple, given typical imprecision on

in the coming quarters, albeit not to the same degree. we are projecting ireland ’ s domestic economy to grow at 2. 3 per cent in 2023 and 3. 3 per cent in 2024. 3 increasing price pressures across the world are putting a squeeze on real incomes and undermining macroeconomic stability. in september, inflation for the euro area was running at 9. 9 per cent4 and in ireland at 8. 2 per cent. 5 this is far too high. but it is likely to stay above our 2 per cent target for an extended period. monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations. 6 let ’ s be clear, tackling the risks from inflation is absolutely critical. we will be in a much worse place if we don ’ t. monetary policy changes to tackle inflation are designed to affect the the risk - free and sovereign curve as these directly affect the conditions for firms, banks and government borrowing in financial markets. this in turn affects the cost of borrowing for households and companies. 7 so as policy is set in an inflationary environment, markets adapt to the policy environment, and firms adapt to the market environment. macro - financial outlook – elevated volatility what does this complex and uncertain macroeconomic outlook mean for financial services? in nearly all my engagements over the last number of weeks with policymakers and industry alike, from washington, to frankfurt, to brussels, and here at home, people expressed concern about risks to the financial system. risks from these complex and uncertain economic and geopolitical developments are in turn creating a volatile and uncertain outlook for the financial sector. just this morning the ecb released its latest financial stability review, and next week the central bank will publish ours. therefore, my focus tonight will be on the euro area. this wider perspective is important. here in ireland we have a highly developed and innovative financial services sector, comprising both domestic - facing and international - facing firms. firms serve households and businesses within ireland, across europe and around the globe. in a nutshell, rising inflation, higher interest rates, weaker growth prospects and financial market repricing have led to a deterioration in financial stability conditions across the euro area. we saw asset prices make some large corrections throughout the year. starting from stretched valuations in a number of sectors and countries, equity prices have fallen sharply, for example. despite this adjustment, risky asset valuations are sensitive to the uncertainty, leaving a