the monetary aggregates were subject to an episode of aberrant behavioral patterns in the early 1990s, they are likely to be of only limited help in making this judgment. for three decades starting in the early 1960s, the public ’ s demand for the broader monetary aggregates, especially m2, was reasonably predictable. in the intermediate term, m2 velocity - - nominal income divided by the stock of m2 - - tended to vary directly with the difference between money market yields and the return on m2 assets - - that is, with its short - term opportunity cost. in the long run, as adjustments in deposit rates caused the opportunity cost to revert to an equilibrium, m2 velocity also tended to return to an associated stable equilibrium level. for several years in the early 1990s, however, the velocities of m2 and m3 exhibited persisting upward shifts that departed markedly from these historical patterns. in the last two to three years, velocity patterns seem to have returned to those historical relationships, after allowing for a presumed permanent upward shift in the levels of velocity. even so, given the abnormal velocity behavior during the early 1990s, fomc members continue to see considerable uncertainty in the relationship of broad money to opportunity costs and nominal income. concern about the possibility of aberrant behavior has made the fomc hesitant to upgrade the role of these measures in monetary policy. against this background, at its february meeting, the fomc reaffirmed the provisional ranges set last july for money and debt growth this year : 1 to 5 percent for m2, 2 to 6 percent for m3, and 3 to 7 percent for the debt of domestic nonfinancial sectors. the m2 and m3 ranges again are designed to be consistent with the fomc ’ s long - run goal of price stability : for, if the velocities of the broader monetary aggregates were to continue behaving as they did before 1990, then money growth around the middle portions of the ranges would be consistent with noninflationary, sustainable economic expansion. but, even with such velocity behavior this year, when inflation is expected to still be higher than is consistent with our long - run objective of reasonable price stability, the broader aggregates could well grow around the upper bounds of these ranges. the debt aggregate probably will expand around the middle of its range this year. i will conclude on the same upbeat note about the u. s. economy with which i began. although a central banker ’ s occupational responsibility is to

. unlike cutting fat, which permanently elevates the levels of productivity, these gains in output per hour are often temporary, as more demanding workloads eventually begin to tax workers and impede efficiency. but the impressive performance of productivity also appears to support the view that the step - up in the pace of structural productivity growth that occurred in the latter part of the 1990s has not, as yet, faltered. indeed, the high growth of productivity during the past year merely extends recent experience. over the past seven years, output per hour has been growing at an annual rate of more than 2 - 1 / 2 percent, on average, compared with a rate of roughly 1 - 1 / 2 percent during the preceding two decades. although we cannot know with certainty until the books are closed, the growth of productivity since 1995 appears to be among the largest in decades. arguably, the pickup in productivity growth since 1995 reflects largely the ongoing incorporation of innovations in computing and communications technologies into the capital stock and business practices. indeed, the transition to the higher permanent level of productivity associated with these innovations is likely not yet completed. once the current level of risk recedes, businesses will no doubt move to exploit the profitable investment opportunities made possible by the ongoing advances in technology. however, history does raise some warning flags concerning the length of time that productivity growth remains elevated. gains in productivity remained quite rapid for years after the innovations that followed the surge in inventions a century ago. but in other episodes, the period of elevated growth of productivity was shorter. regrettably, examples are too few to generalize. hence, policymakers have no substitute for continued close surveillance of the evolution of productivity during this current period of significant innovation. in summary, as we noted last week, “ the [ federal open market ] committee continues to believe that an accommodative stance of monetary policy, coupled with still - robust underlying growth in productivity, is providing important ongoing support to economic activity. however, incoming economic data have tended to confirm that greater uncertainty, in part attributable to heightened geopolitical risks, is currently inhibiting spending, production, and employment. inflation and inflation expectations remain well contained. ” in these circumstances, the committee believed that the actions taken last week to ease monetary policy should prove helpful as the economy works its way through this current soft spot.