– that is, the long - run projection of the nominal funds rate less 2 percent inflation – stood at 1 – 3 / 4 percent in the fomc ’ s recent projections. 8 provided that inflation shows clear signs over time of moving up toward 2 percent in the context of continuing progress toward maximum employment, i therefore expect that a further tightening in monetary policy after the first increase in the federal funds rate will be warranted. should incoming data, however, fail to support this forecast, then the actual path of policy will need to be adjusted appropriately. are there special risks and other considerations that policymakers should take into account in the current environment? as i noted, my fomc colleagues and i generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years, conditional on our baseline forecasts for real activity, inflation, and other aspects of the economy ’ s performance. so far in my remarks, i have emphasized one key rationale for such a judgment – namely, that the equilibrium real federal funds rate is at present well below its historical average and is anticipated to rise only gradually over time as the various headwinds that have restrained the economic recovery continue to abate. if incoming data support such a forecast, the federal funds rate should be normalized, but at a gradual pace. several additional factors reinforce this conclusion, and that brings me to my third question : are there special risks and other considerations that policymakers should take into account in the current environment? keeping in mind that the actual course of monetary policy in the future will primarily depend on events as they unfold, i see three additional considerations that are relevant. 9 portfolio will be steadily falling and because the relative size of the portfolio to the stock of publicly held debt will be shrinking. if resource utilization was at a normal level and inflation was equal to 2 percent, policymakers would presumably opt to set the real federal funds rate equal to the equilibrium real rate in order to maintain those conditions. accordingly, if the equilibrium rate is rising over time, the “ neutral ” setting of monetary policy should be rising in tandem. for example, the estimate of the equilibrium real rate from the laubach - williams model for 2014 : q4 is negative 0. 16. for information on the model, see thomas laubach and john c. williams ( 2003 ), “ measuring the natural rate of interest, ” review of economics and statistics, vol. 85 ( november ), pp. 106

p nandalal weerasinghe : sri lanka's sustained economic growth keynote speech by dr p nandalal weerasinghe, governor of the central bank of sri lanka, at the 37th opa annual conference " sri lanka's sustained economic growth ", colombo, 26 august 2024. * * * it gives me great pleasure to be joining you all today at this event and i extend my best wishes to the organisation of professional associations of sri lanka ( opa ) on the occasion of the annual conference themed'sri lanka's sustained economic growth '. i think it is a very relevant and timely topic this gathering comes at a pivotal moment as sri lanka emerges from one of the most challenging economic crises in its post - independence history. despite these hurdles, the economy has regained its normalcy to a greater extent within a shorter period. this progress is not by chance but is the result of coordinated, transparent, and robust measures undertaken by the central bank of sri lanka and the government, supported by numerous public and private stakeholders even like opa as well as international agencies and lenders and our creditors. a key driver of our progress has been restoration of macroeconomic stability, achieved through a sound monetary policy measure, strong fiscal consolidation measures and implementation of long - overdue structural reforms. these efforts have created a conducive environment for growth as we move forward. consequently, the sri lankan economy broke a six - quarter streak of contractions in the second half of 2023 and has recorded positive growth since then. leading indicators signal that this growth momentum is set to continue, underpinned by strong macroeconomic fundamentals. on the inflation front, inflation, which had peaked at an all - time high in september 2022 to 70 per cent, reverted to single digit levels within a year as a result of monetary policy tightening and inflation remained closer or below the targeted level since then. considering the low inflation, well - anchored inflation expectations and moderation of external sector pressures, the central bank began its monetary policy easing in mid of 2023 with a view to supporting the economy reaching its potential. the central bank's monetary policy stance continues to be accommodative aligning with softened inflationary pressures. as per the current projections based on available information at present the inflation is expected to be well below the target of 5 % until first quarter of 2025 before stabilising around the targeted level later in 2025. though, it is technically inflation target miss on