is in line but just barely with the expectation that inflation will remain close to our 2 percent inflation goal over the medium - to - longer run. survey - based measures of inflation expectations also appear consistent with the fed's inflation goal. in short, the labor market today is robust, and inflation is at or close to the fed's 2 percent inflation goal. thus, the economy is as near as it has been in a decade to meeting both of the fed's dual - mandate objectives, which suggests to me that monetary policy at this stage of the economic expansion should be aimed at sustaining growth and employment at levels consistent with keeping inflation at or close to the 2 percent rate consistent with price stability. by contrast, 2 / 4 bis central bankers'speeches until this year, the appropriate focus of policy had been to return employment and inflation to levels consistent with our dual - mandate objectives. with the economy now operating at or close to mandate - consistent levels for inflation and unemployment, the risks that monetary policy must balance are now more symmetric and less skewed to the downside. policy remains accommodative i supported the fomc's decision last month to raise the target for the federal funds rate to a range of 2 to 2 - 1 / 4 percent. with the economy growing briskly, the labor market operating in the vicinity of full employment, and inflation running close to 2 percent, i saw our decision as another step in removing the extraordinary degree of accommodation put in place in the aftermath of the global financial crisis. however, even after our september decision, i believe u. s. monetary policy remains accommodative. the funds rate is just now for the first time in a decade above the fed's inflation objective, but the inflation - adjusted real funds rate remains below the range of estimates for the longer - run neutral real rate, often referred to as r *, computed from the projections submitted by board members and the reserve bank presidents. this longer - run r *, like the natural rate of unemployment, is both unobserved and time varying and thus must be inferred as a signal extracted from noisy macro and financial data. that said, and notwithstanding the imprecision with which r * is estimated, it remains to me a relevant consideration as i assess the current stance and best path forward for policy. the reason for this is because, as milton friedman argued in his classic american economic association presidential address, a central bank that seeks to consistently

richard h clarida : outlook for the us economy and monetary policy speech by mr richard h clarida, vice chairman of the board of governors of the federal reserve system, at the peterson institute for international economics, washington dc, 25 october 2018. * * * i see some familiar faces in the audience, and i am delighted to be at peterson today to offer my first public remarks since being sworn in last month as vice chairman of the federal reserve board. as some of you know, i have been a student of u. s. monetary policy for more than 30 years. so, for me, personally, it is a distinct honor and real privilege to have the opportunity to serve with my colleagues on the board of governors and, along with the 12 reserve bank presidents, on the federal open market committee ( fomc ). now, of course, i fully realize that i have participated in just one fomc meeting to date, so my remarks today will not come with a patina earned from long experience as a monetary policymaker. that said, i thought it might be of interest to share my thinking on the current state of the u. s. economy, to explain how it informed my support for the fomc's policy decision last month, and to discuss my views on the way forward for u. s. monetary policy. 1 the economic expansion in year 10 the u. s. economic expansion, now in its 10th year, is marked by strong growth in the gross domestic product ( gdp ) and a job market that has been surprising on the upside for nearly two years. it is impossible today to know with much precision how much of the pickup in growth and the decline in unemployment that we have seen over the past two years is structural and how much is cyclical. most likely, both factors are at work. that said, based on my reading of the accumulating evidence, i believe that trend growth in the economy may well be faster and the structural rate of unemployment lower than i would have thought several years ago. let me elaborate. first, let's look at the demand side of the economy. consider the benchmark revisions to the household saving rate. recently revised commerce department data now show that the aggregate household saving rate is running at 6. 7 percent of disposable income. this revised estimate is nearly double the previous estimate. the higher level suggests that, in contrast to the previous economic expansion from 2001 to 2007, when households were