we will begin increasing our securities holdings to maintain an appropriate level of reserves. 18 that time is now upon us. i want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large - scale asset purchase programs that we deployed after the financial crisis. neither the recent technical issues nor the purchases of treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy, to which i now turn. our goal in monetary policy is to promote maximum employment and stable prices, which we interpret as inflation running closely around our symmetric 2 percent objective. at present, the jobs and inflation pictures are favorable. many indicators show a historically strong labor market, with solid job gains, the unemployment rate at half - century lows, and rising prime - age labor force participation. wages are rising, see the balance sheet normalization principles and plans, which are available on the board ’ s website at https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20190320c. htm. - 12 especially for those with lower - paying jobs. inflation is somewhat below our symmetric 2 percent objective but has been gradually firming over the past few months. fomc participants continue to see a sustained expansion of economic activity, strong labor market conditions, and inflation near our symmetric 2 percent objective as most likely. many outside forecasters agree. but there are risks to this favorable outlook, principally from global developments. growth around much of the world has weakened over the past year and a half, and uncertainties around trade, brexit, and other issues pose risks to the outlook. as those factors have evolved, my colleagues and i have shifted our views about appropriate monetary policy toward a lower path for the federal funds rate and have lowered its target range by 50 basis points. we believe that our policy actions are providing support for the outlook. looking ahead, policy is not on a preset course. the next fomc meeting is several weeks away, and we will be carefully monitoring incoming information. we will be data dependent, assessing the outlook and risks to the outlook on a meeting - bymeeting basis. taking all that into account, we will act as appropriate to support continued growth, a strong job market, and inflation moving back to our symmetric 2 percent objective. - 13 references brynjolfsson, erik, avinash collis, and felix eggers ( 2019

for money will increase, putting upward pressure on interest rates. if the fed maintains an unchanged nominal interest rate target, it will have to add reserves to support a higher money supply at the initial interest rate. this means that, under a constant interest rate target, a demand shock would lead to perverse monetary policy, specifically to stimulative open market operations, reinforcing rather than damping the demand shock. the inherent danger in interest rate targeting is reinforced by the preference for central bankers for smoothing interest rates. this preference takes two forms. first, there is a preference for implementing a rise in rates in a series of small changes in the same direction. second, there is a reluctance to change the direction of policy, without particularly strong rationale. nevertheless, interest rate targets can, in principle, be implemented in a way that avoids this pitfall, and one of the values of rules is to remind policymakers of the importance of adjusting interest rates in response to changing economic conditions, thereby preventing policy from becoming destabilizing. - 7principles to guide the setting of interest rates we are now ready to identify a set of principles to guide decisions about the setting of the federal funds rate at fomc meetings. underlying these principles are the lessons gleaned from both the constant money growth rule and from the taylor rule. both rules highlight the importance of imposing a nominal anchor to pin down the long - run inflation rate and of varying real interest rates pro - cyclically to lean against the cyclical winds. the taylor rule also highlights the critical importance of real interest rates in the conduct of monetary policy. there is one very important difference between the constant money growth and taylor rules that deserves comment. while a constant rate of money growth will not always be optimal, if money demand is sufficiently stable, and not particularly interest sensitive, it will pin down inflation in the long run and help smooth the business cycle in the short run. that is, under a money growth target, doing nothing ( that is, maintaining an unchanged rate of money growth ) may not always be the best choice, but, for the most part, it won ’ t get you into serious trouble and will in fact do some considerable good, although it would likely involve a considerable variation in interest rates on a day - to - day basis. under an interest rate targeting regime, on the other hand, doing nothing can potentially get you into great difficulty - - sometimes quite quickly. in this case, policy must