with a lag, also raise benefits under current law. moreover, because the long - range budget assumptions already make a reasonable allowance for future productivity growth, one cannot rule out the chance that productivity growth will fall short of projected future averages. in fiscal year 2005, federal outlays for social security, medicare, and medicaid totaled about 8 percent of gross domestic product. the long - run projections from the office of management and budget suggest that the share will rise to 9 - 1 / 2 percent by 2015 and to about 13 percent by 2030. so long as health - care costs continue to grow faster than the economy as a whole, they will exert budget pressures that seem increasingly likely to make current fiscal policy unsustainable. the likelihood of growing deficits in the unified budget is of especially great concern because the deficits would drain a correspondingly growing volume of real resources from private capital formation and cast an everlarger shadow over the growth of living standards. the broad contours of the challenges ahead are clear. but considerable uncertainty remains about the precise dimensions of the problem and about the extent to which future resources will fall short of our current statutory obligations to the coming generations of retirees. we already know a good deal about the size of the adult population in, say, 2030. almost all who will be in that population have already been born. thus, forecasting the number of social security and medicare beneficiaries is fairly straightforward. so, too, is projecting future social security benefits, which are tied to the wage histories of retirees. however, the uncertainty about future medical spending is daunting. we know very little about how rapidly medical technology will continue to advance and how those innovations will translate into future spending. consequently, the range of possible outcomes for spending per medicare beneficiary expands dramatically as we move into the next decade and beyond. technological innovations can greatly improve the quality of medical care and can, in some instances, reduce the costs of existing treatments. but because technology expands treatment possibilities, it also has the potential to add to overall spending - - in some cases, by a great deal. other sources of uncertainty - - for example, the extent to which longer life expectancies among the elderly will affect medical spending - - may also turn out to be important. as a result, the range of future possible outlays per recipient is extremely wide. the actuaries'projections of medicare costs are, perforce, highly

– the global financial crisis ( gfc ), the european sovereign debt crisis and a pandemic that kept the economy in lockdown. and more recently, russia's unjustifiable war in ukraine that caused energy prices to spike and inflation to soar. shocks that have challenged central banks all over the world in their quest for price stability. shocks that have challenged us to find new instruments, to expand our toolkit to counter the deflationary dynamics and enable governments to engage in fiscal 1 / 3 bis - central bankers'speeches stimulus. a challenge that we met by deploying several unconventional monetary instruments, including forward guidance, asset purchases and longer term refinancing operations. did they work? yes, they certainly left their mark. forward guidance and asset purchases lowered medium to long - term interest rates, making credit more affordable and boosting the economy. tltros significantly reduced banks'funding cost, and stimulated banks to pass on these favorable funding costs to businesses and households. these measures are now an integral part of the central bank's toolbox ; they add policy space when rates are at the lower bound, even though they are not unbounded themselves. yet, as we have found out, they also come with a challenge : the combination of instruments and the sequencing we ourselves imposed have created a very high degree of persistence in our monetary policy. in other words : it reduced our ability to'turn the ship'when inflation flared up. why was that? the moment policy makers could effectively raise rates was delayed because we communicated that the we would first stop with net asset purchases before raising rates. and stopping asset purchases takes time. they were a novel, untested instrument. and as brainard argued : uncertainty regarding an instrument calls for smaller steps. so, to'turn the ship ', we started by gradually reducing the net asset purchases to zero under the pepp and app. after that, in july 2022, we were'free'to raise rates for the first time. what followed was a rise of policy rates at an unprecedented pace : between july 2022 to september 2023, policy rates increased by a total of 450 basis points from minus 0. 5 percent to 4 percent today. restrictive policies will likely remain needed for some time to come to get inflation back down to target. personally, and conditional on incoming data confirming the latest projections from september, i see the current level of our policy rates as a good'cruising altitude'where they