important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate, and that also provided unprecedented information about our policy reaction function. we indicated that, with inflation running persistently below 2 percent, our policy will aim to achieve inflation outcomes that keep inflation expectations well anchored at our 2 percent longer - run goal. we said that we expect to maintain an accommodative stance of monetary policy until these outcomes — as well as our maximum - employment mandate — are achieved, and also that we expect it will be appropriate to maintain the current 0 to 1 / 4 percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee ’ s assessments of maximum employment, until inflation has risen to 2 percent, and until inflation is on track to moderately exceed 2 percent for some time. we also stated that the federal reserve will, over coming months, continue to increase our holdings of treasury securities and agency mortgage - backed securities at least at the current pace to - 4sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses. banking initiatives in recent months, the federal reserve has announced several initiatives to support the efforts of our nation ’ s banks to sustain the flow of credit to households and firms during these challenging times. along with the other federal banking agencies, we have encouraged banks to work constructively with borrowers who have been affected by covid - 19 — offering a customer a responsible loan modification can be a safe and sound banking practice and can help facilitate the economic recovery. 3 turning to some issues of particular importance to small banks, we have provided temporary regulatory relief on the community bank leverage ratio, on regulatory reporting deadlines, and on appraisal requirements. we have also streamlined our bank examinations for small banks. these actions are providing banks with additional time and resources to adjust their operations to prioritize the financial needs of their customers and communities, and to play the vital role of lending to small businesses through the ppp. with regard to actions taken that are relevant for larger institutions, we have adapted our stress - testing framework to better identify the potential effects of the pandemic on the capital positions of our banks. in june, we released the annual stresstest results and an additional sensitivity analysis that explored vulnerabilities of banks to the downside risks to the economy arising from the pandemic. 4 at the same time, to for loan

for release on delivery 11 : 45 a. m. edt october 19, 2020 u. s. economic outlook, monetary policy, and initiatives to sustain the flow of credit to households and firms remarks by richard h. clarida vice chair board of governors of the federal reserve system at the unconventional convention of the american bankers association washington, d. c. ( via webcast ) october 19, 2020 it is my pleasure to meet virtually with you today at the unconventional convention of the american bankers association. 1 i look forward to my conversation with rob nichols, but first, please allow me to offer a few remarks on the economic outlook, federal reserve monetary policy, and some of the initiatives we have announced to support the flow of credit to households and firms during these challenging times. current economic situation and outlook in the first half of this year, the covid - 19 ( coronavirus disease 2019 ) pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the u. s. economy since the great depression. gross domestic product ( gdp ) collapsed at an almost 32 percent annual rate in the second quarter, and more than 22 million jobs were lost in march and april. this recession was by far the deepest one in postwar history, but it also may go into the record books as the briefest recession in u. s. history. the flow of macrodata received since may has been surprisingly strong, and gdp growth in the third quarter is estimated by many forecasters to have rebounded at roughly a 30 percent annual rate. this development is especially noteworthy when set in relief against the surge in new covid - 19 cases that were reported this summer in a number of u. s. states and the coincident flatlining in a number of high - frequency activity indicators that we follow to track the effect of the virus on economic activity. although spending on many services continues to lag, the rebound in the gdp data has been broad based across indicators of goods consumption, housing, and investment. these components of aggregate demand have benefited from robust fiscal the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. i would like to thank chiara scotti for her assistance in preparing these remarks. - 2support — including expanded unemployment benefits and the small business administration ’ s paycheck protection program ( ppp ) — as well as low interest rates and efforts by the federal reserve to sustain