longer needed, and lending at a true penalty rate so the usage of the facility naturally declines as market conditions normalize. closing thoughts as regulatory attention turns toward the liquidity framework and liquidity regulation, i expect we will see a growing momentum to “ do something ” that would help address the banking stress from 2023. while some reforms may be necessary, we should think about the response to banking stress more broadly. “ bank term funding program, ” board of governors of the federal reserve system, march 12, 2023, https : / / www. federalreserve. gov / newsevents / pressreleases / files / monetary20230312a1. pdf. “ bank term funding program. ” board of governors of the federal reserve system, “ federal reserve board announces the bank term funding program ( btfp ) will cease making new loans as scheduled on march 11, ” news release, january 24, 2024, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20240124a. htm. “ as the program ends, the interest rate applicable to new btfp loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made. this rate adjustment ensures that the btfp continues to support the goals of the program in the current interest rate environment. this change is effective immediately. ” see “ how america accidentally made a freemoney machine for banks, ” the economist, january 18, 2024, https : / / www. economist. com / leaders / 2024 / 01 / 18 / how - america - accidentally - made - a - free - money - machine - for - banks. - 15 we should continue to focus on improving the targeted approach of supervision, to enhance the “ prevention ” of banking system stress. we should think about the liquidity framework in a broad - based manner to ensure that the available tools, resources, and requirements are working in a complementary way. and we should understand what changes we need to make discount window lending and other emergency lending programs more efficient and effective. thank you for the opportunity to take part in this important and timely discussion, and for the participation of our esteemed panelists in this important event. i look forward to hearing the panelists ’ perspectives.

of income has been rising, why inflation is so well contained, and why stock prices have soared. the only problem is the data. it is true that productivity has increased more rapidly recently. this is not clear - cut evidence of a shift in the productivity trend, however, because productivity normally accelerates when output growth rises, as it has over the last year. there is, however, some support for the view that we are experiencing a speed - up in the trend rate of productivity growth. for example, if we measure productivity from the income side rather than the product side of the national accounts, we do observe a sharper acceleration in productivity. this income - side measure of productivity provides at least a tantalizing hint of an increase in trend productivity growth. this would also be consistent with a considerable number of reports by businesses that they are realizing new efficiencies in production, both through corporate reorganization and through the application of new technology. what was the rationale for the march 25 tightening? the discussion of the rationale for the march 25 policy move to follow is my personal view. during the period from june 1996, when i joined the board, through february 1997, utilization rates had remained in a very narrow range, in the case of the unemployment rate only a shade below my estimate of nairu. recall that the unemployment rate averaged 5. 4 % in 1996. there was some risk that utilization rates were already so high that inflation might increase over time, but this risk was not clear enough, in my judgment, to justify action. i viewed growth as either close to trend already or about to slow to trend, implying that there was negligible risk that utilization rates would rise further. so, before march 25, the federal reserve ’ s posture was one of “ watchful waiting, ” but with an asymmetric directive, based on the judgment that the risks were weighted toward higher inflation. in march, my view was that there was sufficient momentum in growth to justify a forecast that utilization rates would rise materially further, in the absence of a change in policy. the policy action was clearly a preemptive one, not based on inflation pressures evident at the time, but on inflation pressures likely to emerge in the absence of policy action. as the chairman has repeatedly emphasized, lags in the response to monetary policy make it imperative that monetary policy be forward looking and anticipatory, not backward looking and reactive. one of the principles of prudent monetary policy