evaluated. these proposed metrics would also use thresholds that are tailored to local market conditions, while also retaining a focus on targeted performance context factors. lastly, we hope the anpr will provide a foundation for the agencies to converge on a consistent approach that has broad support among stakeholders. stakeholders, including the nhc, have expressed strong support for the agencies to work together to modernize cra. by reflecting stakeholder views and providing a long public comment period, we believe that the anpr provides the basis for the agencies to establish a consistent approach that has broad support. before concluding, i want to highlight a few proposals in the anpr that have particular relevance to affordable housing. first, the anpr proposes two separate tests for evaluating the cra performance of large retail banks — a retail test and a community development test — in response to the overwhelming stakeholder feedback we heard about the vital importance of both retail and community development activities. in the anpr, each of these tests would have a subtest that focuses on financing and a subtest that focuses on services, resulting in four overall subtests for large retail banks. - 7second, the anpr proposes evaluating a bank ’ s retail lending in its major product lines using metrics that measure the number of loans a bank makes, not the dollar - value of these loans. as a result, a larger mortgage loan would count the same as a smaller - dollar mortgage under the proposed metrics. we think this is important to avoid providing incentives to serve borrowers seeking to finance higher - priced homes at the expense of lower - income borrowers seeking finance for lower - priced homes. third, the anpr proposes combining consideration of community development loans and qualified investments, including originations and purchases, into one metricsbased community development financing subtest. we believe this could encourage the provision of patient capital because both new originations and those already on the balance sheet would be included in the evaluation metric. fourth, stakeholders have emphasized the critical importance of cra - motivated capital as a source of funding for affordable rental and single - family housing for lmi populations. given the significant unmet need for affordable housing, the anpr provides an opportunity to carefully reconsider how we define affordable housing in the cra regulations and how we can strengthen existing provisions for the creation and preservation of affordable housing, both rental and owner - occupied. the anpr proposes new regulatory language that would specify that a housing unit would be considered affordable

implications for monetary policy of a step - up in trend productivity growth and, hence, trend real gdp growth? first, such a development would ultimately call for an upward revision to the targets for money growth, so that the money growth targets would remain consistent with an unchanged target for the inflation rate. as a practical matter, however, this is not a serious policy issue because the monetary aggregate targets play only a minor role in the conduct of monetary policy today. at any rate, such an adjustment might be premature today, given the uncertainty about the underlying trend. however, if the apparent higher trend productivity and gdp growth persists, at some point the money growth ranges should be appropriately adjusted. under the prevailing operational regime of setting a target for the federal funds rate, money growth would automatically adjust to accommodate the higher rate of trend growth, at an unchanged nominal federal funds rate target. over the longer run, the challenge under an interest - rate regime is to align the real federal funds rate with its new equilibrium value, which is likely to increase with a higher trend rate of productivity growth ( due to a higher return on capital that underlies the new equilibrium real interest rate in the economy ). the principal challenge to a monetary policy focused on utilization rates is that an unexpected shift in productivity growth, in effect lowers the unemployment rate consistent with stable inflation ( the nairu ) for a while. this allows the economy to operate at a higher utilization rate without inflationary consequences, at least until the higher productivity is fully anticipated in wage bargaining or until productivity growth stops accelerating. let me explain the source of the decline in the effective nairu. assume that the increase in productivity is not anticipated and therefore does not immediately raise workers ’ real wage demands. with unchanged nominal wage demands and higher productivity, firms will experience a decline in unit labor costs. this will initially boost profits. but competition will quickly force the lower costs to be passed through to consumers in lower prices, lowering price inflation relative to nominal wage change. this decline in inflation, in turn, will put some downward pressure on nominal wage gains. the net result is that an unanticipated increase in the rate of growth of productivity is another example of a favorable supply shock, temporarily lowering inflation. it is useful, nevertheless, to distinguish price shocks – such as declines in energy or non - oil import prices – from productivity growth shocks that have their initial effects on costs rather than on prices. during a transitional period following an unexpected increase in the productivity trend,