on to say : “ however, if incoming information indicates faster progress toward the committee ’ s employment and inflation objectives than the committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated. ” in other words, what the fomc does going forward will depend on how the economy evolves, and how this affects the labor market and the inflation outlook. in considering the appropriate timing of lift - off, there are three important reasons to be patient. first, the committee is still undershooting both its employment and inflation objectives. unemployment is too high and inflation is too low. thus, monetary policy needs to be very accommodative in order to close these gaps relative to the committee ’ s objectives. second, when interest rates are at the zero lower bound, the risks of tightening a bit too early seem considerably greater than the risks of tightening a bit too late. a premature tightening might lead to financial conditions that are too tight, resulting in a weaker economy and an aborted lift - off. this would be problematic in that it would harm the fed ’ s credibility and, more importantly, would be difficult to rectify. the u. s. experience during the great depression and the japanese experience over the past two decades illustrate the risks of raising interest rates too soon, especially when inflation is running below the central bank ’ s objective. finally, given the still high level of long - term unemployment, there could be a significant benefit to allowing the economy to run “ slightly hot ” for a while in order to get these people employed again. if they are not employed relatively soon, their job skills will erode further, bis central bankers ’ speeches reducing their long - term prospects for employment and, therefore, the productive capacity of the u. s. economy. all that said, i hope the economic outlook evolves so that it will be appropriate to begin to raise interest rates sometime next year. while raising interest rates is often portrayed as a difficult task for central bankers, in fact, given the events since the onset of the financial crisis, it would be a development to be truly excited about. raising interest rates would signal that the u. s. economy is finally getting healthier, and that the fed is getting closer to achieving its dual mandate objectives of maximum employment and price stability. that would be very good

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