board broadens program of support for the flow of credit to households and businesses by establishing a money market mutual fund liquidity facility ( mmlf ), march 18, 2020. 3 / 4 bis central bankers'speeches 7 for announcements of the various programs, see board of governors of the federal reserve system, federal reserve board announces establishment of a commercial paper funding facility ( cpff ) to support the flow of credit to households and businesses, march 17, 2020 ; board of governors of the federal reserve system, federal reserve board announces establishment of a primary dealer credit facility ( pdcf ) to support the credit needs of households and businesses, march 17, 2020 ; board of governors of the federal reserve system, federal reserve board broadens program of support for the flow of credit to households and businesses by establishing a money market mutual fund liquidity facility ( mmlf ), march 18, 2020 ; board of governors of the federal reserve system, federal reserve announces extensive new measures to support the economy, march 23, 2020 ; board of governors of the federal reserve system, federal reserve will establish a facility to facilitate lending to small businesses via the small business administration ’ s paycheck protection program ( ppp ) by providing term financing backed by ppp loans, april 6, 2020 ; and board of governors of the federal reserve system, federal reserve takes additional actions to provide up to $ 2. 3 trillion in loans to support the economy, april 9, 2020. 8 see board of governors of the federal reserve system, federal reserve takes additional actions to provide up to $ 2. 3 trillion in loans to support the economy, april 9, 2020. 9 for announcements of the various programs, see board of governors of the federal reserve system, coordinated central bank action to enhance the provision of u. s. dollar liquidity, march 15, 2020 ; board of governors of the federal reserve system, federal reserve announces the establishment of temporary u. s. dollar liquidity arrangements with other central banks, march 19, 2020 ; board of governors of the federal reserve system, coordinated central bank action to further enhance the provision of u. s. dollar liquidity, march 20, 2020 ; and board of governors of the federal reserve system, federal reserve announces establishment of a temporary fima repo facility to help support the smooth functioning of financial markets, march 31, 2020. 4 / 4 bis central bankers'speeches

policy. there are three key takeaways worth highlighting : first and foremost is the secular decline in the neutral rate of interest, or r - star, which has brought neutral real interest rates to near zero in the united states. this decline in r - star in turn implies that the constraint on monetary policy from the lower bound on nominal interest rates has become a central aspect of the landscape with which policymakers must contend. second, over the past decade, inflation in the united states has been below our 2 percent longerrun target most of the time, and a number of measures of inflation expectations have drifted down in recent years. 3 it is important to note that these first two observations are closely connected, as emphasized in the paper with thomas mertens that i presented at last year ’ s hoover conference. in a world of 1 / 3 bis central bankers'speeches low r - star and a lower bound on nominal interest rates, a standard inflation targeting approach can lead to inflation and inflation expectations that are anchored below the targeted level. 4 third, during the long economic recovery following the 2007 – 09 recession, we saw the unemployment rate reach 50 - year lows without causing an undesired rise in inflation. structural changes in the economy — and in particular the labor market — have greatly expanded the level of employment that can be maintained without creating inflationary pressures. but, changes like those are hard to see in real time, making estimates of the natural rate of unemployment or other barometers of the economy ’ s potential inherently uncertain and subject to change. 5 evolution in our thinking one clear lesson is the critical importance of formulating a policy approach that effectively and consistently keeps longer - run inflation expectations anchored at 2 percent. perhaps the most notable change we announced to our framework was explicitly describing success in terms of achieving inflation that averages 2 percent over time. in particular, “ following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time. " 6 a second tangible evolution in our approach is that we made explicit that in seeking maximum employment, we are focused on eliminating shortfalls from that goal. we also emphasized the inclusive nature of our maximum employment goal. this means thinking more broadly than the aggregate rate of unemployment and examining the full range of indicators when it comes to assessing shortfalls from maximum employment. together, these changes position us to deliver on our dual mandate goals in a world of very low r - star and persistently