soon, the federal open market committee ( fomc ) will devote time at its regular meetings to assess the lessons from these events, supported by analysis by staff from around the federal reserve system. we will publicly report the conclusions of our discussions, likely during the first half of next year. in the meantime, anyone who is interested in learning more can find information on the federal reserve board ’ s website. 1 let me turn now from the longer - term issues that are the focus of the review to the nearer - term outlook for the economy and for monetary policy. so far this year, the economy has performed reasonably well. solid fundamentals are supporting continued growth and strong job creation, keeping the unemployment rate near historic lows. although inflation has been running somewhat below our symmetric 2 percent objective, we have expected it to pick up, supported by solid growth and a strong job market. along with this favorable picture, we have been mindful of some ongoing crosscurrents, including trade developments and concerns about global growth. when the fomc met at the start of may, tentative evidence suggested these crosscurrents were moderating, and we saw no strong case for adjusting our policy rate. since then, the picture has changed. the crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. our contacts in business and agriculture report heightened concerns over trade developments. these concerns may have contributed to the drop in business confidence in some recent surveys and may be starting to show through to incoming data. for example, the limited available evidence we have suggests that investment by businesses has slowed from the pace earlier in the year. against the backdrop of heightened uncertainties, the baseline outlook of my fomc colleagues, like that of many other forecasters, remains favorable, with unemployment remaining near historic lows. inflation is expected to return to 2 percent over time, but at a somewhat slower pace than we foresaw earlier in the year. however, the risks to this favorable baseline outlook appear to have grown. last week, my fomc colleagues and i held our regular meeting to assess the stance of monetary policy. we did not change the setting for our main policy tool, the target range for the federal funds rate, but we did make significant changes in our policy statement. since the beginning of the year, we had been taking a patient stance toward assessing the need for any policy

we can turn this crisis to our long - run advantage by reviewing and reforming the structure and regulation of banking. as sir walter scott noted, the failure of the ayr bank in 1772 “ was a terrible [ warning ], and has been so well attended to in scotland … forcing a capital on the district could only lead to wild speculation, instead of supporting solid and promising undertakings ”. of the bankers themselves, scott recognised that, while the majority were “ good men ”, “ there may have been, among so numerous a body, men of a different character, fishers in troubled waters, capitalists who sought gain not by the encouragement of fair trade and honest industry, but by affording temporary fuel to rashness or avarice ”. if unsustainable capital flows provided the fuel and an inadequately designed regulatory system ignited the fuel, the past two years have shown how dangerous it is to let bankers play with fire. this is not a question of blame – as sir walter rightly said, the majority in the industry are “ good men ” and women. it is a matter of the incentives they face. to protect our genuinely successful financial centres – of which edinburgh is clearly one – reform of banking is essential. with that, i am confident that we will have attended to our terrible warning and our varied and internationally competitive financial services industry will thrive.