december, a touch below the fed ’ s 2 percent objective. after assessing the recent data, my take is that the current shortfall in inflation from target as most likely due to transitory factors that will fade through 2018, pushing inflation back up to target. suffice to say, a deviation from our target of a few tenths of 1 percentage point, especially one i expect to fade, does not cause me great concern. against this economic backdrop, with a strong labor market and likely only temporary softness in inflation, i view it as appropriate that monetary policy should continue to be gradually normalized. an important component of this normalization was initiated in october, when we started to gradually scale back our reinvestment of proceeds from maturing treasury securities and principal payments from agency securities. with the balance sheet normalization plan set to remain on autopilot, barring a material deterioration in the economic outlook, the federal funds rate remains our primary tool for adjusting the stance of monetary policy. at our january meeting, the federal open market committee decided to maintain its target range for the federal funds rate between 1 - 1 / 4 percent and 1 - 1 / 2 percent. 2 in this range, monetary policy remains accommodative. i anticipate further gradual increases in the policy rate will be appropriate to both sustain a healthy labor market and stabilize inflation around our 2 percent objective. of course, it should go without saying that i will keep a close eye on economic indicators — and their implications for the outlook for inflation and real activity and adjust my views on appropriate monetary policy accordingly. i would like to wrap up with a word on the financial sector. the federal reserve and our colleagues at other agencies have now spent the better part of the past decade building out and standing up the post - crisis regulatory regime. at this point, we have completed the bulk of the work of post - crisis regulation. as such, now is an eminently natural and expected time to step back and assess those efforts. it is our responsibility to ensure that they are working as intended, and — given the breadth and complexity of this new body of regulation — it is inevitable that we will be able to improve them, especially with the benefit of experience and hindsight. 1 the views i express here are my own and not necessarily those of the federal reserve board or the federal open market committee. 2 see board of governors of the federal reserve system ( 2018 ), “ federal reserve issues fomc statement, ”

ben s bernanke : implementing a macroprudential approach to supervision and regulation speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the 47th annual conference on bank structure and competition, chicago, illinois, 5 may 2011. * * * the recent financial crisis revealed critical gaps and weaknesses in the u. s. financial system and the financial regulatory framework. the congress and the administration last year provided a roadmap for addressing many of these problems, in the form of the dodd - frank wall street reform and consumer protection act ( dodd - frank act ) – the topic of this year ’ s conference. legislative reforms in any complex area always face the risk of fighting the last war, responding to the causes of the last crisis without sufficient attention to where new problems may arise. to their credit, the authors of the dodd - frank act attempted to reduce this risk by building in a number of features aimed at helping our system of financial oversight adapt over time to changes in the financial environment. notably, a central element of the legislation is the requirement that the federal reserve and other financial regulatory agencies adopt a socalled macroprudential approach – that is, an approach that supplements traditional supervision and regulation of individual firms or markets with explicit consideration of threats to the stability of the financial system as a whole. the act also created a new financial stability oversight council, whose membership comprises a diverse group of federal and state financial regulators, to coordinate the government ’ s efforts to identify and respond to systemic risks. the explicit incorporation of macroprudential considerations in the nation ’ s framework for financial oversight represents a major innovation in our thinking about financial regulation, one that is taking hold abroad as well as in the united states. this new direction is constructive and necessary, i believe, but it also poses considerable conceptual and operational challenges in its implementation. in my remarks today i will briefly discuss the rationale for macroprudential supervision and regulation, describe the new structure of macroprudential supervision and regulation in the united states, and explain how we at the fed are doing our part to implement the macroprudential approach to financial oversight. macroprudential supervision and regulation ultimately, the goal of macroprudential supervision and regulation is to minimize the risk of financial disruptions that are sufficiently severe to inflict significant damage on the broader economy. the systemic orientation of the macroprudential approach may be contrasted with that of the traditional, or