most of the federal reserve ’ s targeted financial measures - - such as liquidity facilities to ensure the flow of credit to households and businesses - - were withdrawn soon after the crisis as orderly conditions resumed in financial markets. in contrast, the fomc ’ s easing of monetary policy increased over time as the longer - term economic effects of the crisis gradually became clear. from 2007 through 2013, the fomc added ever greater support for the economy. 7 from late 2008, with rates pinned at the zero lower bound, the committee resorted to unconventional policies to put additional downward pressure on long - term rates, including strong calendar - based forward guidance regarding the likely future path of the federal funds rate, and several rounds of large - scale asset purchases ( often referred to as quantitative easing ( qe ) ). 8 both the federal funds rate and the balance sheet are currently set at levels intended to provide significant support to economic activity. normalization of the stance a chronology of changes in the fomc ’ s target federal funds rate is available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / openmarket. htm. the fomc ’ s purchases of longer - term securities ( u. s. treasury securities, agency debt obligations, and agency - guaranteed mortgage - backed securities ) reduced the outstanding stock of these securities available in the market and therefore tended to put upward pressure on bond prices and downward pressure on their yields - - specifically, on the term premium component of longer - term interest rates. this unconventional monetary policy was an appropriate means of providing a boost to spending by households and firms during a period of economic slack, when our ability to provide accommodation by conventional means was limited by the fact that the federal funds rate had reached almost zero. - 6of monetary policy will return both tools to a more neutral setting over time. that process can be said to have begun in 2014, when the fomc ended its asset purchases and began active discussions on lifting the federal funds rate from its lower bound. 9 our first rate hike came in december 2015, with another in december 2016, and one additional increase so far this year. the normalization process is projected to have several years left to run. in the case of the federal funds rate, the endpoint of that process will occur when our target reaches the long - run neutral rate of interest. estimates of that rate are subject to significant uncertainty. the median estimate of its

of circumstances. ” 24 some have advocated a return to a framework similar to the pre - 2007 system, in which the volume of reserves would likely be far below its present level and the federal funds rate would be managed by frequent open market operations. 25 this “ corridor ” framework remains a feasible option, although, in my view, it may be less robust over time than a floor system. concluding remarks after a tumultuous decade, the economy is now close to full employment and price stability. the problems that some commentators predicted have not come to pass. accommodative policy did not generate high inflation or excessive credit growth ; rather, see board of governors of the federal reserve system ( 2016 ), “ minutes of the federal open market committee, november 1 - 2, 2016, ” press release, november 23, paragraph 6, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20161123a. htm. see, for example, john b. taylor ( 2016 ), “ interest on reserves and the fed ’ s balance sheet, ” cato journal, vol. 36 ( fall ), pp. 711 - 20. - 13 it helped restore full employment and return inflation closer to our 2 percent goal. the current discussions of the normalization of monetary policy are a result of that success.