maximum employment and price stability, or should the toolkit be expanded? and, if so, how? ” the fomc ’ s primary means of changing the stance of monetary policy is by adjusting its target range for the federal funds rate. in december 2008, the fomc cut that target to just above zero in response to financial turmoil and deteriorating economic conditions. because the u. s. economy required additional policy accommodation after the elb was reached, the fomc deployed two additional tools in the years following the crisis : balance sheet policies and forward guidance about the likely path of the federal funds rate. 22 the fomc altered the size and composition of the fed ’ s balance sheet through a sequence of three large - scale securities purchase programs, via a maturity extension program, and by adjusting the reinvestment of principal payments on maturing securities. with regard to forward guidance, the fomc initially made “ calendar based ” statements, and, later on, it issued “ outcome based ” guidance. overall, the empirical evidence suggests that these added tools helped stem the crisis and support economic recovery by strengthening the labor market and lifting inflation back toward 2 percent. that said, estimates of the effects of these unconventional policies range widely. 23 as an illustration of the shortfall in policy support created by a binding elb during the global financial crisis, the simple policy rules considered in a january 2017 speech by then - chair janet yellen prescribed setting the federal funds rate between negative 1 - 1 / 2 and negative 9 percent ; see yellen ( 2017 ). in addition to using these two additional monetary policy tools, the federal reserve implemented a number of other measures to stabilize the financial system, increase households and business confidence, and more generally support the economic recovery. these supplementary measures included the setting up of several credit facilities and the introduction of stress tests for systemically important financial institutions. on the transmission channels of balance sheet policies, see d ’ amico and others ( 2012 ), joyce and others ( 2012 ), clarida ( 2012 ), woodford ( 2012 ), and bauer and rudebusch ( 2014 ). on the financial market - 10 in addition to assessing the efficacy of these existing tools, we will examine additional tools to ease policy when the elb is binding. during the crisis and its aftermath, the federal reserve considered but ultimately found some of the tools deployed by foreign central banks wanting relative to the alternatives it did pursue. but the review will reassess the

the data, finding that equal shares of the population considered themselves better and worse off when the measured inflation rate was 1. 5 percent, a result suggesting a 1. 5 percent measurement bias in the cpi. nordhaus's method requires that the entire income distribution move at the same rate. when krueger and siskind ( 1998 ) modified the test with more fine - grained distributional calculations, the estimated bias was reduced. summary so where does this leave me on the two policy questions i promised to address? i find myself on the soft side of each of them. the first question is whether the u. s. central bank should adopt a more formal inflation - targeting regime. i personally would not go that far. my reading of the empirical evidence is that the key ingredient in keeping inflation low and stable is that the central bank be firmly determined to achieve and maintain stable prices in the long run. i believe the fed is already so determined, with every member of the federal open market committee ( fomc ) since i have been here repeating this mantra often. to me, there does not seem to be huge value in further tying down the committee through a formal inflation - targeting regime, and there could be some costs. on the other hand, it may be possible to get some of the transparency and accountability advantages of inflation targeting, and to lock in the gains from having reduced inflation, by going to an intermediate approach. the fomc might simply announce its preferred long - run range for inflation. this range should be understood as a preferred range that would not bind the committee or override other important objectives of monetary policy. it should clearly be understood as a long - term objective, not a short - term objective. the fomc would not have to defend any deviations from the preferred range. perhaps such a step would increase transparency without limiting central bank flexibility to any appreciable degree. if we were to adopt a preferred range, what should it be? in light of the strategic considerations mentioned above, along with quantifiable measurement error, i would personally set the bottom of the range at slightly above 1 percent per year for the core pce deflator, the fed's preferred inflation measure. because of audience polls, and at least until they are replaced by more rigorous information, i would set the top of the range at about 2. 5 percent per year. the midpoint of this range is then slightly less than 2 percent per year, which