for the federal funds rate by 1 / 4 percentage point at both our march and june meetings, with the range now standing at 1 to 1 - 1 / 4 percent. and, in october, the committee began its balance sheet normalization program, which will gradually and predictably reduce our securities holdings. the committee set limits on the pace of balance sheet reduction ; those limits should guard against outsized moves in interest rates and other potential market strains. indeed, there has been little, if any, market effect associated with the balance sheet runoff to date. we do not foresee a need to alter the balance sheet program, but, as we said in june, we would be prepared to resume reinvestments if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate. changes to the target range for the federal funds rate will continue to be the committee ’ s primary means of adjusting the stance of monetary policy. at our meeting earlier this month, we decided to maintain the existing target range for the federal funds rate. we continue to expect that gradual increases in the federal funds rate will be appropriate to sustain a healthy labor market and stabilize inflation around the fomc ’ s 2 percent objective. that expectation is based on the view that the current level of the federal funds rate remains somewhat below its neutral level — that is, the rate that is neither expansionary nor contractionary and keeps the economy operating on an even keel. the neutral rate currently appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance. if the neutral level rises somewhat over time, as most fomc participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain the economic expansion. of course, policy is not on a preset course ; the appropriate path for the federal funds rate will depend on the economic outlook as informed by incoming data. the committee has noted that it will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. more generally, in determining the timing and size of future interest rate adjustments, the committee will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. thank you. i would be pleased to answer your questions. 2 / 2 bis central bankers'speeches

high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained. even with a step - up in growth of economic activity and a stronger labor market, inflation has continued to run below the 2 percent rate that the federal open market committee ( fomc ) judges most consistent with our congressional mandate to foster both maximum employment and price stability. increases in gasoline prices in the aftermath of the hurricanes temporarily pushed up measures of overall consumer price inflation, but inflation for items other than food and energy has remained surprisingly subdued. the total price index for personal consumption expenditures increased 1. 6 percent over the 12 months ending in september, while the core price index, which excludes energy and food prices, rose just 1. 3 percent over the same period, about 1 / 2 percentage point slower than a year earlier. in my view, the recent lower readings on inflation likely reflect transitory factors. as these transitory factors fade, i anticipate that inflation will stabilize around 2 percent over the medium term. however, it is also possible that this year ’ s low inflation could reflect something more persistent. indeed, inflation has been below the committee ’ s 2 percent objective for most of the past five years. against this backdrop, the 1 / 2 bis central bankers'speeches fomc has indicated that it intends to carefully monitor actual and expected progress toward our inflation goal. although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly slow during this expansion relative to earlier decades. one key reason for this slowdown has been the retirement of the older members of the baby - boom generation and hence the slower growth of the labor force. another key reason has been the unusually sluggish pace of productivity growth in recent years. to generate a sustained boost in economic growth without causing inflation that is too high, we will need to address these underlying causes. in this regard, the congress might consider policies that encourage business investment and capital formation, improve the nation ’ s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies. monetary policy i will turn now to the implications of recent economic developments and the outlook for monetary policy. with ongoing strengthening in labor market conditions and an outlook for inflation to return to 2 percent over the next couple of years, the fomc has continued to gradually reduce policy accommodation. the committee raised the target range