- dependent approach to scaling back accommodation over the past couple of years has served the u. s. economy well. this same approach will continue to drive our policy decisions in the months and years ahead. with that in mind, our policy aims to support continued growth of the american economy in pursuit of our congressionally mandated objectives. we do that, as i have noted, with an eye always on the risks. to that end, we realize that waiting too long to scale back some of our support could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and pushing the economy into recession. having said that, i currently see no evidence that the federal reserve has fallen behind the curve, and i therefore continue to have confidence in our judgment that a gradual removal of accommodation is likely to be appropriate. however, as i have noted, unless unanticipated developments adversely affect the economic outlook, the process of scaling back accommodation likely will not be as slow as it was during the past couple of years. 6 / 8 bis central bankers'speeches references board of governors of the federal reserve system ( 2017 ). monetary policy report ( pdf ). washington : board of governors, february. d ’ amico, stefania, william english, david lopez - salido, and edward nelson ( 2012 ). “ the federal reserve ’ s large - scale asset purchase programmes : rationale and effects, " economic journal, vol. 122 ( november ), pp. f415 – 46. engen, eric m., thomas laubach, and david reifschneider ( 2015 ). “ the macroeconomic effects of the federal reserve ’ s unconventional monetary policies ( pdf ), ” finance and economics discussion series 2015 – 005. washington : board of governors of the federal reserve system, february. holston, kathryn, thomas laubach, and john c. williams ( 2016 ). “ measuring the natural rate of interest : international trends and determinants ( pdf ), ” finance and economics discussion series 2016 – 073. washington : board of governors of the federal reserve system, september. yellen, janet ( 2016 ). “ the federal reserve ’ s monetary policy toolkit : past, present, and future, ” speech delivered at “ designing resilient monetary policy frameworks for the future, ” a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 26

our decisions about the appropriate stance of monetary policy going forward? these questions are difficult because the interactions between monetary policy and the economy are complex. policy affects the economy through many different channels, and, in turn, many factors influence the appropriate course of policy. gauging the current stance of monetary policy requires arriving at a judgment of what would constitute a neutral policy stance at a given time. a useful concept in this regard is the neutral “ real ” federal funds rate, defined as the level of the federal funds rate that, when adjusted for inflation, is neither expansionary nor contractionary when the economy is operating near its potential. in effect, a “ neutral ” policy stance is one where monetary policy neither has its foot on the brake nor is pressing down on the accelerator. although the concept of the neutral real federal funds rate is exceptionally useful in assessing policy, it is difficult in practical terms to know with precision where that rate stands. as a result, and as i described in a recent speech, my colleagues and i consider a wide range of information when assessing that rate. 2 as i will discuss, our assessments of the neutral rate have significantly shifted down over the past few years. 1 / 8 bis central bankers'speeches in the committee ’ s most recent projections last december, most fomc participants assessed the longer - run value of the neutral real federal funds rate to be in the vicinity of 1 percent. 3 this level is quite low by historical standards, reflecting, in part, slow productivity growth and an aging population not only in the united states, but also in many advanced economies. moreover, the current value of the neutral real federal funds rate appears to be even lower than this longerrun value because of several additional headwinds to the u. s. economy in the aftermath of the financial crisis, such as subdued economic growth abroad and perhaps a lingering sense of caution on the part of households and businesses in the wake of the trauma of the great recession. it is difficult to say just how low the current neutral rate is because assessments of the effect of post - recession headwinds on the current level of the neutral real rate are subject to a great deal of uncertainty. some recent estimates of the current value of the neutral real federal funds rate stand close to zero percent. 4 with the actual value of the real federal funds rate currently near minus 1 percent, a near - zero estimate of the neutral real rate means that the stance of monetary policy remains moderately accommodative, an