and longer - term treasury securities. the committee initiated a second round of treasury purchases last november and has indicated that it intends to complete those purchases by staff analysis at the federal reserve board indicates that a dollar increase in retail gasoline prices – a little more than has occurred over the last year – reduces real household disposable income by nearly 1 percent and hence tends to exert a significant drag on consumer spending. increased investment in energy - conserving technologies would likely provide a partial offset to the various factors damping capital spending outside the commodity - producing sectors. bis central bankers ’ speeches the end of june. my reading of the evidence is that these securities purchases have proven effective in easing financial conditions, thereby promoting a stronger pace of economic recovery and checking undesirable disinflationary pressures. i believe this accommodative policy stance is still appropriate because unemployment remains elevated, longer - run inflation expectations remain well anchored, and measures of underlying inflation are somewhat low relative to the rate of 2 percent or a bit less that committee participants judge to be consistent over the longer term with our statutory mandate. however, there can be no question that sometime down the road, as the recovery gathers steam, it will become necessary for the fomc to withdraw the monetary policy accommodation we have put in place. that process will involve both raising the target federal funds rate over time and gradually normalizing the size and composition of our security holdings. importantly, we are confident that we have the tools in place to withdraw monetary stimulus, and we are prepared to use those tools when the right time comes. of course, there are risks to the outlook that may affect the timing and pace of monetary policy firming. in my view, however, even additional large and persistent shocks to commodity prices might not call for any substantial change in the course of monetary policy as long as inflation expectations remain well anchored and measures of underlying inflation continue to be subdued. as i noted earlier, a surge in commodity prices unavoidably impairs performance with respect to both aspects of the federal reserve ’ s dual mandate : such shocks push up unemployment and raise inflation. a policy easing might alleviate the effects on employment but would tend to exacerbate the inflationary effects ; conversely, policy firming might mitigate the rise in inflation but would contribute to an even weaker economic recovery. under such circumstances, an appropriate balance in fulfilling our dual mandate might well call for the fomc to leave the stance of monetary policy

charles bean : global aspects of unconventional monetary policies panel remarks by mr charles bean, deputy governor for monetary policy of the bank of england, at the federal reserve bank of kansas city economic policy symposium, jackson hole, wyoming, 24 august 2013. * * * since the demise of lehman brothers and the subsequent exceptional contraction in demand in 2008 – 9, central banks have not only expanded the range of their liquidity operations in order to restore financial stability, but also adopted a range of unconventional monetary measures in order to raise aggregate demand once short - term policy rates had reached their effective lower bound. those measures include : large - scale purchases of government bonds and private securities ( quantitative easing ) ; selective actions to support the flow of credit ; and guidance over the future path of policy rates. while i believe these policies helped the advanced economies to avoid some of the worst downside scenarios, they have proved controversial – particularly quantitative easing – provoking plenty of criticism, both at home and abroad. before i turn to the particular focus of this conference, namely the global consequences, let me say a few words on the domestic costs and benefits. some have questioned whether quantitative easing works at all. in both the united kingdom and the united states, central bank reserves pay the policy rate and are consequently close substitutes for treasury bills. the only differences are that just banks can hold reserves and reserves can be turned straight into cash at the central bank, whereas treasury bills would have to be sold or repo ’ d out first. under ricardian equivalence, quantitative easing of the sort undertaken by the bank of england and the federal reserve should then be irrelevant because private agents internalise the tax implications of the associated changes in the consolidated public sector balance sheet. i think the empirical evidence from the growing number of event studies and the like strongly suggests that this is not the case and that market imperfections give the policy traction by reducing term premia. this, i believe, was particularly true during the worst of the post - crisis recession, though it may have become less so as markets have returned towards normality. that is reinforced by recent market movements in response to heightened anticipation that the federal reserve will shortly begin to taper its purchases. a more serious objection is that they are simply the wrong policy to deal with the problem at hand. low policy rates and quantitative and credit easing all seek to encourage the intertemporal switching of spending from the future to the present. but, according to the critics, that just leads to further debt