but the foundations of our free society remain sound, and i am confident that we will recover and prosper as we have in the past. as a consequence of the spontaneous and almost universal support that we received from around the world, an agreement on a new round of multilateral trade negotiations now seems more feasible. such an outcome would lead to a stronger global market system. a successful round would not only significantly enhance world economic growth but also answer terrorism with a firm reaffirmation of our commitment to open and free societies. but before the recovery process gets under way, stability will need to be restored to the american economy and to others around the world. arguably, that stability was only barely becoming evident in the united states in the period immediately preceding the acts of terrorism. aggregate measures of production, employment, and business spending continued to be weak. that said, consumer spending moved higher in august and appeared to be reasonably well maintained in the first part of september. industry analysts suggest that motor vehicle sales were running close to august levels, and chain store sales were only modestly lower. purchasing managers had noted an improvement in the orders picture in august. moreover, the dramatic rate of decline in profits was slowing. to be sure, these signs were tentative but, on the whole, encouraging. during the past week, of course, the level of activity has declined. the shock is most evident in consumer markets where many potential purchasers stayed riveted to their televisions and away from shopping malls. both motor vehicle sales and sales at major chain stores, some of our most current information on consumer spending, appear to have fallen off noticeably. and, the airline and travel industries have suffered severe cutbacks. the unprecedented shutdown of american air travel and tightened border restrictions have induced dramatic curtailments of production at some establishments with tight just - in - time supply chain practices. automakers, for example, are reported to have pared production and even closed some plants in the past week, largely owing to supply shortages, though, doubtless, short - term demand uncertainties have also played a part. the effect on financial markets of the devastating attack on the world trade center was pronounced, as telecommunications and trading capacities were severely impaired. but the markets are mostly functioning now, albeit in some cases using contingency arrangements, and, as in the past, the infrastructure will be rapidly restored. for a brief time, the terrorist attack markedly disrupted payment transfers that are usually measured in terms of trillions of

michelle w bowman : brief remarks on the economy and bank regulation brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the ceo / executive management conference, sponsored by the mississippi bankers association and the tennessee bankers association, banff, canada, 2 october 2023. * * * thank you for the invitation to join you today. it is a privilege to speak to so many bank leaders from mississippi and tennessee together at the same time, and i appreciate the opportunity to be here with you. 1 as a former community banker, one of the most informative, enjoyable, and productive aspects of my role is the time i spend with community bankers, listening to issues that are important to you and that affect you and your customers, including, of course, the impact of the fed's regulation and supervision. community banks play a key role in supporting economic growth and lending to serve their customers and communities, which is an indispensable role in the u. s. economy. before we turn to our conversation, i'd like to offer a few thoughts on the economy and monetary policy, following our federal open market committee ( fomc ) meeting last month. as you know, at that meeting, my colleagues and i voted to maintain the target range for the federal funds rate at 5 - 1 / 4 to 5 - 1 / 2 percent, after raising rates sharply over the past year and a half to reduce inflation. since then, there has been considerable progress on lowering inflation and the fomc has responded this year with a more gradual pace of increases. in keeping with this approach, we held the policy rate steady in june, raised it by 25 basis points in july, and then held steady again last month. inflation continues to be too high, and i expect it will likely be appropriate for the committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way. most recently, the latest inflation reading based on the personal consumption expenditure ( pce ) index showed that overall inflation rose, responding in part to higher oil prices. i see a continued risk that high energy prices could reverse some of the progress we have seen on inflation in recent months. at the same time, the economy has remained strong as the fomc has tightened monetary policy. real gross domestic product ( gdp has been growing at a solid pace. consumer spending has remained robust, and the housing sector