same is true of estimates of the neutral interest rate. we therefore refer to many indicators when judging the degree of slack in the economy or the degree of accommodation in the current policy stance. we are also aware that, over time, inflation has become much less responsive to changes in resource utilization. while inflation has recently moved up near 2 percent, we have seen no clear sign of an acceleration above 2 percent, and there does not seem to be an elevated risk of overheating. this is good news, and we believe that this good news results in part from the ongoing normalization process, which has moved the stance of policy gradually - 14 closer to the fomc ’ s rough assessment of neutral as the expansion has continued. as the most recent fomc statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate. the economy is strong. inflation is near our 2 percent objective, and most people who want a job are finding one. my colleagues and i are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent. - 15 references bernanke, ben s. ( 2007 ). “ inflation expectations and inflation forecasting, ” speech delivered at the monetary economics workshop of the national bureau of economic research summer institute, cambridge, mass., july 10, https : / / www. federalreserve. gov / newsevents / speech / bernanke20070710a. htm. blinder, alan s., and ricardo reis ( 2005 ). “ understanding the greenspan standard, ” paper presented at “ the greenspan era : lessons for the future, ” a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 25 - 27, https : / / www. kansascityfed. org / publicat / sympos / 2005 / pdf / blinder - reis2005. pdf. blinder, alan s., and janet l. yellen ( 2001 ). the fabulous decade : macroeconomic lessons from the 1990s. new york : century foundation press. board of governors of the federal reserve system ( various years ). bluebook ( monetary policy alternatives ). washington : board of governors, june 1996 - december 1998, https : / / www. federalreserve.

. for a more complete discussion of the greatly distilled account here, see the sources in note 9. - 10 believing that signs of rising inflation would soon appear. and meeting after meeting, inflation gradually declined. in retrospect, it may seem odd that it took great fortitude to defend “ let ’ s wait one more meeting, ” given that inflation was low and falling. conventional wisdom at the time, however, still urged policymakers to respond preemptively to inflation risk - - even when that risk was gleaned mainly from hazy, real - time assessments of the stars. with the experience in the new - economy period, policymakers were beginning to appreciate that, with inflation expectations much better anchored than before, there was a smaller risk that an inflation uptick under greenspan ’ s “ wait and see ” approach would become a significant problem. risk management in the face of shifting stars given what the economy has shown us over the past 15 years, the need for the sort of risk - management approach that originated in the new - economy era is clearer than ever before. that approach continues to evolve based on experience and the growing literature on monetary policy and structural uncertainty. experience has revealed two realities about the relation between inflation and unemployment, and these bear directly on the two questions i started with. first, the stars are sometimes far from where we perceive them to be. in particular, we now know that the level of the unemployment rate relative to our real - time estimate of u * will sometimes be a misleading indicator of the state of the economy or of future inflation. second, the reverse also seems to be true : inflation may no longer be the first or best indicator of a tight labor market and rising pressures on resource utilization. part of the reason inflation sends a weaker signal is undoubtedly the achievement of anchored inflation expectations - 11 and the related flattening of the phillips curve. 14 whatever the cause, in the run - up to the past two recessions, destabilizing excesses appeared mainly in financial markets rather than in inflation. thus, risk management suggests looking beyond inflation for signs of excesses. these two realities present challenges. the literature on uncertainty reviewed at the 2003 symposium - - and much refined since then - - provides important advice for how policy should respond, although not yet, in my view, an explicit recipe or rule that a prudent central bank should follow. 15 the literature on robust rules, such as so - called difference rules, for