for release on delivery 10 : 00 p. m. est ( 7 : 00 p. m. pst ) march 8, 2019 monetary policy : normalization and the road ahead remarks by jerome h. powell chair board of governors of the federal reserve system at 2019 siepr economic summit stanford institute of economic policy research stanford, california march 8, 2019 thank you for the opportunity to speak here today at the stanford institute for economic policy research, a place dedicated to scholarship supporting policies to better peoples ’ lives. as today is international women ’ s day, i would like to preface my remarks by commending the american economic association for highlighting the diversity challenges of the economics profession and charting a way forward. diversity is also a priority at the fed : i want the fed to be known within the economics profession as a great place for women, minorities, and others of diverse backgrounds to be respected, listened to, and happy. just over 10 years ago, the federal open market committee ( fomc, or the committee ) lowered the federal funds rate close to zero, which we refer to as the effective lower bound, or elb. unable to lower rates further, the committee turned to two novel tools to promote the recovery. the first was forward guidance, which is communication about the future path of interest rates. the second was large - scale purchases of longer - term securities, which became known as quantitative easing, or qe. there is a range of views, but most studies have found that these tools provided significant support for the recovery. from the outset, the committee viewed them as extraordinary measures to be unwound, or “ normalized, ” when conditions ultimately warranted. today i will explore some important features of normalization and then turn to what comes after. in some ways, we are returning to the pre - crisis normal. in other ways, things will be different. the world has moved on in the last decade, and attempting to re - create the past would be neither practical nor wise. as normalization moves into its later stages, my colleagues and i also believe that this is an important - 2moment to take stock of issues raised by the remarkable experiences of the past decade. we are therefore conducting a review of the fed ’ s monetary policy strategy, tools, and communications practices. i will conclude with some thoughts on the review. balance sheet normalization between december 2008 and october 2014, the federal reserve purchased $ 3. 7 trillion in longer - term treasury and

vast array of information we have at our disposal. of course, that includes the standard econometric toolkit. but we have also been increasingly relying on text analytics and machine learning. 1 / 3 bis - central bankers'speeches as a result, this conference is highly relevant for us at the federal reserve, and likely those at other central banks as well. more timely and accurate information and improved methodological techniques permit federal reserve staff to produce better estimates of the evolving economic outlook, which allows policymakers to make moreinformed decisions. it is reassuring to know that the use of these nontraditional data and techniques for academic research and for policy is no longer in its infancy. the breadth and depth of studies captured in the agenda display the material inroads of these data and methods into economic research. i am pleased to see colleagues and important contributors to this field on the conference program. jed kolko, julapa jagtiani, arthur turrell, and hal varian will discuss issues related to the opportunities and challenges for government and privatesector institutions in response to nontraditional data, machine learning, and artificial intelligence. similarly, an academic panel with jesus fernandez - villaverde, sydney ludvigson, stephen hansen, and chiara farronato will discuss how these data and methods have helped push the research frontier in subjects ranging from macroeconomic modeling to online markets. as i noted in recent remarks, there has been a surge in excitement and trepidation about generative ai. 3 the range of social effects from this new technology could be broad. jack clark, one of the co - founders of anthropic, will soon offer a keynote, and i am sure we are all looking forward to hearing his insights on the practical applications of this new ai technology and the potential use cases for economic research and policymaking. i am especially interested in seeing progress on " explainable ai, " which can bridge the divide between the technical sphere and users. i am looking forward to any discussions on this area. these generative ai tools could also have implications closer to home, as they may influence how we conduct central bank communications. there is a growing literature that uses natural language processing techniques to discern how communications by central bankers are perceived by the news media, and, in turn, how that influences financial markets. the presentations by christopher neely, clara vega, xin zhang, and xu zhang will discuss the state of the art on this subject, which