household spending power with nearly a percentage point increase to real disposable incomes. • the housing sector is now in much better balance. the inventory - sales ratio for homes is near, or even slightly below, levels typically considered “ normal, ” and there has been a significant drop in the fraction of households carrying mortgage balances in excess of the value of their homes. • the fiscal restraint that has held back growth in recent years has given way to a more neutral posture. bis central bankers ’ speeches • the non - financial corporate sector remains in generally healthy condition, with high profit margins and a high ratio of liquid assets to current liabilities. of course, there are important risks to the growth outlook including : whether households behave cautiously relative to fundamentals given the experience of the great recession ; the extent of the impact to the oil producing sector from lower oil prices, and the direction of the business cycle abroad. the fomc ’ s view in its january statement was that the risks to u. s. growth are nearly balanced. there are also risks in both directions to the inflation outlook. headline inflation has fallen quite low due to the drop in oil prices. these effects are likely to be transitory. measures of underlying inflation such as the core pce deflator have been running somewhat short of the fomc ’ s 2 percent objective for some time. moreover, market - based measures of mediumterm inflation compensation have fallen somewhat below the objective in recent months, even if survey measures of expectations have held essentially steady. there are also upside risks to inflation. the unemployment rate has declined and wage growth should firm as remaining slack diminishes. moreover, the u. s. economy ’ s productivity performance has been relatively unimpressive in recent quarters. if continued, this could also begin to push inflation higher. it is in this context that the committee has begun to consider the appropriate timing and pace for removing extraordinary accommodation. the committee stated in january that “ it can be patient in beginning to normalize the stance of monetary policy, ” and that the timing of any policy shift will be data dependent, based on an ongoing careful evaluation of progress towards the committee ’ s goals of maximum employment and 2 percent inflation. 1 emerging market officials and market participants have expressed concerns that fed liftoff might spark an undue tightening in global financial conditions, creating a new growth headwind for emerging market economies. these concerns are understandable. the federal funds rate has been near the zero lower

banks, and substantial fines. it is imperative to firmly deal with illegal, unsafe and unsound banking practices, including money laundering and transactions with u. s. - sanctioned countries. it is also important to be on the look - out for potential unintended consequences and externalities, such as widespread de - risking where correspondent bank access is shut off to compliant counter parties and to legal flows, economic costs are excessively increased, or flows migrate to avenues subject to less oversight or transparency. the scope, scale, and impact of de - risking need to be better understood. dialogue between market participants and the official sector is ongoing, both multilaterally and bilaterally. let me conclude. the u. s. economy and financial system have strengthened notably in recent years and in a mutually reinforcing way. u. s. monetary and regulatory policy both need to be tailored to domestic conditions. the fed is also mindful of the international effects of its policies, given the central place of the u. s. in the global financial system, and the potential for spillbacks to the u. s. economy and financial system. effective communication with market participants and policymakers is important. the opportunity for dialogue is what makes conferences such as this one valuable. thank you very much. “ monitoring the effects of agreed regulatory reforms on emerging market and developing economies ”, financial stability board, november 12, 2014. enhanced prudential standards for bank holding companies and foreign banking organizations, federal register, vol. 79 no. 59, march 27, 2014. bis central bankers ’ speeches