but remains a flexible tool that can be used to understand the implications of a range of macroeconomic and financial conditions. that includes conditions that few could have imagined, such as those that descended last spring. the temporary shutdown of large segments of the economy caused an unprecedentedly large and swift drop in economic activity. equally unprecedented was the degree of uncertainty, both downside and upside, about how the economy would progress throughout the remainder of 2020. we responded to that abrupt change in environment by adapting stress testing to conduct a sensitivity analysis, an application of the stress testing models used to inform the board of governors about risks to bank solvency during those rapidly changing conditions. the sensitivity analysis we conducted was possible because we routinely collect standardized data from banks on their exposures and have developed our own loss and income models at the fed. thus, we were able to conduct this analysis purely internally, without putting additional burdens on banks during an already - difficult time. that analysis used the same models as the regular stress test, but we made several changes with the goal of gaining a real - time understanding of the implications for bank capital of quite plausible downside scenarios. the sensitivity analysis included three additional scenarios that reflected the potential economic implications of the covid event, as we understood them at the time. we also incorporated targeted adjustments to account for material changes to bank balance sheets resulting from the covid event, such as large drawdowns on corporate credit lines. at that time of great uncertainty, this sensitivity analysis helped sharpen our understanding of how banks might fare under the wide range of possible paths of the economy. we published that analysis to bolster public confidence in the financial system by providing a rigorous and timely assessment of the condition and prospects for the banking sector, based on data and wellestablished analytical methods. the additional analysis gave the public a view into the intellectual underpinnings of the policy actions the board took, which included special limitations on — but not a complete elimination of — capital distributions and a requirement for all firms to re - assess their capital needs and submit another capital plan in late 2020 in light of the economic uncertainty. the december round of stress tests that followed informed an adjustment to and extension of the distribution limitations into the first quarter of 2021, and we are continuing to use insights from the stress tests as we consider when to lift the limitations. throughout the covid event, the stress test has provided analysis necessary to tailor our actions to the risks we faced, and we have used the results from

members, small business owners, residents of low - and moderate - income communities, retirees, and others. we want to hear your perspective on maximum employment and price stability — the monetary policy goals congress has assigned us. now is a good time to conduct the review. unemployment is near a half - century low, and inflation is running close to, but a bit below, our 2 percent objective. while not everyone fully shares economic opportunities and the economy faces some risks, overall it is — as i like to say — in a good place. our job is to keep it there as long as possible. while we believe our strategy and tools have been and remain effective, the u. s. economy, like other advanced economies around the world, is facing some longer - term challenges — from low growth, low inflation, and low interest rates. while slow growth is obviously not good, you may be asking, “ what ’ s wrong with low inflation and low interest rates? ” low can be good, but when inflation — and, consequently, interest rates — are too low, the fed and other central banks have less room to cut rates to support the economy during downturns. so, in this review, we are examining strategies that might better allow us to symmetrically and sustainably achieve 2 percent inflation. doing so would help prevent inflation expectations among 1 / 2 bis central bankers'speeches consumers, businesses, and investors from slipping too low, as they appear to have done in several advanced economies. more - firmly anchored expectations, in a virtuous circle, would help keep actual inflation around our target, thus preserving our ability to change interest rates as appropriate to meet our mandate. we are also looking at whether our existing monetary policy tools will be adequate when the next downturn comes. finally, we are asking whether our communications practices can be improved to better support the effectiveness of our policy. after today, we have two fed listens sessions remaining, both later this month : one in kansas city and another in chicago. at the july meeting of the federal open market committee, my colleagues and i began discussing what we ’ ve learned so far from the fed listens events. we continued that discussion at our september meeting and have a lot left to do. we plan to publicly report our conclusions during the first half of next year. one clear takeaway of the sessions so far is the importance of sustaining our historically strong job market. people from low - and moderate - income communities tell us this