– that is, the long - run projection of the nominal funds rate less 2 percent inflation – stood at 1 – 3 / 4 percent in the fomc ’ s recent projections. 8 provided that inflation shows clear signs over time of moving up toward 2 percent in the context of continuing progress toward maximum employment, i therefore expect that a further tightening in monetary policy after the first increase in the federal funds rate will be warranted. should incoming data, however, fail to support this forecast, then the actual path of policy will need to be adjusted appropriately. are there special risks and other considerations that policymakers should take into account in the current environment? as i noted, my fomc colleagues and i generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years, conditional on our baseline forecasts for real activity, inflation, and other aspects of the economy ’ s performance. so far in my remarks, i have emphasized one key rationale for such a judgment – namely, that the equilibrium real federal funds rate is at present well below its historical average and is anticipated to rise only gradually over time as the various headwinds that have restrained the economic recovery continue to abate. if incoming data support such a forecast, the federal funds rate should be normalized, but at a gradual pace. several additional factors reinforce this conclusion, and that brings me to my third question : are there special risks and other considerations that policymakers should take into account in the current environment? keeping in mind that the actual course of monetary policy in the future will primarily depend on events as they unfold, i see three additional considerations that are relevant. 9 portfolio will be steadily falling and because the relative size of the portfolio to the stock of publicly held debt will be shrinking. if resource utilization was at a normal level and inflation was equal to 2 percent, policymakers would presumably opt to set the real federal funds rate equal to the equilibrium real rate in order to maintain those conditions. accordingly, if the equilibrium rate is rising over time, the “ neutral ” setting of monetary policy should be rising in tandem. for example, the estimate of the equilibrium real rate from the laubach - williams model for 2014 : q4 is negative 0. 16. for information on the model, see thomas laubach and john c. williams ( 2003 ), “ measuring the natural rate of interest, ” review of economics and statistics, vol. 85 ( november ), pp. 106

jerome h powell : welcoming remarks speech by mr jerome h powell, chairman of the board of governors of the federal reserve system, at the 2019 federal reserve system community development research conference " renewing the promise of the middle class ", washington dc, 9 may 2019. * * * it is my pleasure to welcome all of you to the federal reserve system ’ s 11th community development research conference, cosponsored by the community development offices of all 12 federal reserve banks and the board of governors. these biennial conferences are one manifestation of the federal reserve ’ s deep commitment to supporting research that helps policymakers, community development practitioners, and researchers improve the economic well - being of families and communities. these gatherings also inform the federal reserve system ’ s work in promoting consumer protection and community development, and i would like to thank all of you for your contributions to this conference. this year our conference focuses on pathways to the middle class. while there are many definitions of “ middle class, ” i think we can agree that achieving a basic level of economic security is fundamental. surveys suggest that many americans believe being middle class means having a secure job and the ability to save. 1 in recent decades, income growth for middle - income households has lagged behind that for high income households. 2 in addition, economic resources differ markedly by race, education, occupation, geography, and other factors. those circumstances underscore a two - fold challenge for our country : fostering the conditions that will help lower - income families reach the middle class, while ensuring that middle - class status still provides the basic economic security that it has traditionally offered. the conference organizers have sorted through the many research questions that will be addressed today and tomorrow and have taken away three key observations that are fundamental to addressing the challenges related to the middle class. the first observation is to note the long - term decline in relative income growth and upward economic mobility for those in the middle. according to a number of measures, income has grown more slowly for middle - class households since the 1970s than for those with higher incomes, resulting in wider income inequality. the kind of generational improvements in living standards that were long the hallmark of the american middle class have steadily diminished. in the 1950s, better than 80 percent of children born in middle - class households grew up to outearn their parents, but more recently only around half do. one factor in this decline is the increase in income inequality i just noted, and another is slower productivity growth. this conference will