major economic quantities such as inflation, unemployment, and the growth rate of gross domestic product ( gdp ) fluctuate around values that are considered “ normal, ” or “ natural, ” or “ desired. ” the fomc has chosen a 2 percent inflation objective as one of these desired values. the other values are not directly observed, nor can they be chosen by anyone. instead, these values result from myriad interactions throughout the economy. in the fomc ’ s quarterly summary of economic projections ( sep ), participants state their individual views on the longer - run - 4normal values for the growth rate of gdp, the unemployment rate, and the federal funds rate. these fundamental structural features of the economy are also known by more familiar names such as the “ natural rate of unemployment ” and “ potential output growth. ” the longer - run federal funds rate minus long - run inflation is the “ neutral real interest rate. ” at the fed and elsewhere, analysts talk about these values so often that they have acquired shorthand names. for example, u * ( pronounced “ u star ” ) is the natural rate of unemployment, r * ( “ r star ” ) is the neutral real rate of interest, and π * ( “ pi star ” ) is the inflation objective. according to the conventional thinking, policymakers should navigate by these stars. 3 in that sense, they are very much akin to celestial stars. for example, the famous taylor rule calls for setting the federal funds rate based on where inflation and unemployment stand in relation to the stars. 4 if inflation is higher than π *, raise the real federal funds rate relative to r *. the higher real interest rate will, through various channels, tend to moderate spending by businesses and households, which will reduce upward pressure on prices and wages as the economy cools off. in contrast, if the unemployment rate is above u *, lower the real federal funds rate relative to r *, which will stimulate spending and raise employment. navigating by the stars can sound straightforward. guiding policy by the stars in practice, however, has been quite challenging of late because our best assessments of the location of the stars have been changing significantly. in this talk, i will sidestep the issue of navigating by short - run versus long - run versions of the stars. the challenges that i will highlight are, in my view, made more difficult, and the case for a careful riskmanagement approach made stronger, by the need

commercial property market ; developments at eu regarding banking regulation / supervision ; update on matters relating to costs associated with motor and business insurance including the cbi publication – “ review of motor damage claims handling ” ; consumer protection issues ; update on preparations from brexit ; update on developments in the credit union sector. 2 according to the website daft. ie 3 see box c “ leading indicators of new housing output ” in quarterly bulletin 2018q2 4 the volume of cash transactions is calculated from the rolling annual total of bpfi mortgage drawdowns ( excluding one - offs / self - builds from the central bank monitoring template data ) and the total number of cso residential dwelling property transactions. the cso housing transactions are inclusive of all market and nonmarket activity by households and non - households. 5 the return on assets is an indicator of how profitable a credit union is relative to its total assets employed. it is calculated as net income divided by total assets. 6 / 6 bis central bankers'speeches