increase followed two rate hikes totaling 75 basis points earlier this year, and we indicated that further increases will likely be appropriate in the months ahead. on june 1, the fed took a separate step to tighten monetary policy by beginning to reduce its large balance sheet of securities holdings. i strongly supported the fomc ’ s decision last week, and i expect to support additional rate increases until we see significant progress toward bringing inflation down. based on current inflation readings, i expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis - 4points in the next few subsequent meetings, as long as the incoming data support them. depending on how the economy evolves, further increases in the target range for the federal funds rate may be needed after that. the case for further rate hikes is made stronger by the current level of the “ real ” federal funds rate, which is the difference between the nominal rate and near - term inflation expectations. with inflation much higher than the federal funds rate, the real federal funds rate is negative, even after our rate increases this year. since inflation is unacceptably high, it doesn ’ t make sense to have the nominal federal funds rate below near - term inflation expectations. i am therefore committed to a policy that will bring the real federal funds rate back into positive territory. while i expect that the labor market will remain strong as the fomc continues to tighten monetary policy, these actions do not come without risk. but in my view, our number one responsibility is to reduce inflation. maintaining our commitment to restore price stability is the best course to support a sustainably strong labor market. the fed ’ s credibility, earned over decades of low inflation, is a powerful policy tool that is critical to our long - term success. if that credibility erodes, it must be re - earned. as a step toward that goal, i also supported the committee ’ s action to begin reducing the fed ’ s balance sheet, which is providing unneeded economic stimulus making inflation worse. the current balance sheet is composed of treasury securities and a significant amount of agency mortgage - backed securities ( mbs ). since the longerterm goal of the balance sheet reduction plan includes a treasuries - only balance sheet, it would make sense to eventually incorporate mbs sales into the plan so that reaching this - 5goal does not take too long. my longer - term goal would be to get

the fed out of the business of indirectly intervening in the real estate market. in closing, i know that inflation, and our efforts to lower it, may present challenges for banks. the first session on your agenda this morning discussed interest rate risk, and i would be interested to learn how you are managing this risk so far and what you expect as the year progresses. many of your sessions and speakers overlap with the fed ’ s work in supervision and much of what i ’ m focused on, including innovation and how best to use technology like ai and fintech to level the playing field for banks. attracting and retaining talent, along with succession planning, are absolutely critical for long - term sustainability. one other matter is the recently issued community reinvestment act ( cra ) proposed rule that would significantly change supervisory implementation and qualifying activities. i strongly encourage you to review this proposal and comment so that banks subject to the cra understand the changes and will be able to continue to effectively serve their customers and communities. i look forward to hearing your thoughts on these issues, and i look forward to our discussion. thanks again for the invitation to join you this week — it ’ s great to be here with you to discuss these and other important matters.