federal reserve ’ s flexibility to adapt its operational and analytical tools to the dynamic nature of the markets in which we operate. as always, these views are mine alone and do not necessarily reflect those of the new york fed or the federal reserve system. ongoing refinements in the federal reserve ’ s approach to policy normalization with the conclusion of the fomc ’ s asset purchase program last october and the ongoing reinvestment of principal repayments, the system open market account ’ s ( soma ) securities portfolio stands at $ 4. 25 trillion. this portfolio is associated with some $ 2. 9 trillion in excess bis central bankers ’ speeches reserve balance liabilities – a level at which the open markets trading desk ( the desk ) will be unable to move the effective federal funds rate up or down with small variations in the supply of reserves, as it did before the financial crisis. 1 against this backdrop, implementation of monetary policy will require a new operational approach to influence shortterm interest rates when the fomc determines it is time to start raising them. the fomc outlined its anticipated approach to policy normalization – that is, raising the federal funds rate and other short - term interest rates to more normal levels, and reducing the federal reserve ’ s securities holdings – in a statement of policy normalization principles and plans published after the september 2014 fomc meeting, with additional details provided in the march 2015 fomc meeting minutes. 2 in its september statement, the committee noted its plans to reduce monetary policy accommodation by raising its target range for the federal funds rate. the federal reserve intends to move the federal funds rate into the target range primarily by adjusting the interest rate it pays on excess reserve balances ( ioer ), and will use an on rrp facility and other supplementary tools, as needed, to help control the federal funds rate. the committee noted that an on rrp facility will be used only to the extent necessary and will be phased out once it is no longer needed to help control the federal funds rate. with respect to the fed ’ s balance sheet, the committee intends to reduce securities holdings in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal on securities held in the soma. 3 in the longer run, the committee intends that the federal reserve will hold no more securities than necessary to implement monetary policy efficiently and effectively, and that it will hold primarily treasury securities. the march 2015 minutes augment the september principles

potential shutdown in the availability of credit, which would have made the current economic crisis even more severe. although functioning in financial markets has improved since march, the federal reserve has indicated that it will continue to increase asset holdings to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. 9 in addition to stabilizing financial markets, the federal reserve has instituted a number of programs to support the flow of credit to households, businesses, and state and local governments. these actions will enable them to continue to do their work, both now and when normal life resumes. 10 taken together, these programs have helped restore the functioning of financial markets, foster favorable financial conditions, and support the continued flow of credit to businesses and households. conclusion i'll conclude with this : this pandemic and this recession form a pivotal moment for the federal reserve. we are seeing signs that the economy has started to recover. still, the economic outlook remains highly uncertain and it's going to take considerable time to restore the economy to its full potential. but rest assured, we are committed to using our full range of tools to support the economy and bring about a full and robust recovery. 1 covid - 19 dashboard by the center for systems science and engineering at johns hopkins university, accessed june 29, 2020. 2 the impact on lower - wage workers is analyzed in cajner, tomaz, l. d. crane, r. a. decker, j. grigsby, a. hamins - puertolas, e. hurst, c. kurz, and a yildirmaz., 2020. “ the u. s. labor market during the beginning of the pandemic recession. ” becker friedman institute, university of chicago, working paper, no. 2020 – 58 ( june ). 3 u. s. census bureau and department of housing and urban development, monthly new residential construction, may 2020, june 17, 2020. 4 an example at the new york fed is the bi - weekly publication of the weekly economic index. 5 empire state manufacturing survey, federal reserve bank of new york, june 2020 ; business leaders survey, federal reserve bank of new york, june 2020. the data on small business revenue come from womply, a software - as - a - service provider focused on customer relationship management. 6 see board of governors of the federal reserve system, federal reserve issues fomc statement, march 3, 2020 ; and board