the yield on 10 - year treasury bonds, the yield on 3 - month treasury bills, and the 10 - year triple - b corporate yield. 3 that is, the supervisory projections of net interest income are primarily based on models that implicitly assume that other rates such as libor or sofr move passively with short - term treasury rates. given these mechanics, choosing to lend at sofr rather than libor will not result in lower projections of net interest income under stress in the stress - test calculations of the federal reserve. i hope i have been able to provide you with some further clarity today. i am sure that the rest of the roundtable will do so as well. i want to applaud the members of the arrc who are working hard to make sure this threat to financial stability is avoided. 1 vice chair for supervision quarles also serves as chair of the financial stability board. the remarks represent 2 / 3 bis central bankers'speeches his own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 the arrc ’ s recommendations for fallback www. newyorkfed. org / arrc / fallbacks - contract - language. contract language can be found at 3 see board of governors of the federal reserve system ( 2019 ), dodd - frank act stress test 2019 : supervisory stress test methodology ( pdf ) ( washington : board of governors, march ), table 2, p. 23. 3 / 3 bis central bankers'speeches

mr. meyer reviews the economic outlook and challenges for monetary policy in the united states remarks by mr. laurence h. meyer, a member of the board of governors of the us federal reserve system, at the charlotte economics club, charlotte, north carolina on 16 / 1 / 97. 1996 was an extraordinarily good year for the economy. measured on a fourth quarter to fourth quarter basis, it appears that gdp advanced around 3 % and prices, measured by the chain price index for gdp, increased just above 2 %. a little historical perspective will help us further appreciate recent economic performance. inflation in 1996, measured by the chain price index for gdp or the core cpi, was the lowest in 30 years. and this was not a one - year fluke. last year was the fifth consecutive year that inflation, measured by the chain gdp price index, was 2. 6 % or lower and the 5 - year compound annual inflation rate is now 2. 5 %, the lowest since 1967. the extraordinary achievement of 1996, of course, was reaching such low levels of unemployment and inflation at the same time. the 5. 4 % unemployment rate in 1996 was the lowest annual rate since 1988 and before that since 1973. specifically, the surprise was a decline in measures of core inflation for consumer and producer goods and in the inflation rate for the gdp price index during a year when the unemployment rate declined and averaged more than ½ percentage point below levels that in the past had been associated with stable inflation. in the second half of the year, growth slowed, the unemployment rate stabilized, and inflation remained well contained. there is little evidence of imbalances that would jeopardize the expansion. as a result, the consensus forecast projects growth near trend and relatively stable inflation and unemployment rates. we should not, however, let ourselves be overcome by our good fortune. the business cycle is not dead and monetary policy is certain to be challenged again. at the moment, trend growth near full employment appears to be a reasonable prospect in the year ahead. still we want to remain alert for challenges that might lie just over the horizon. in particular, there remains some uncertainty as to whether the current unemployment rate will prove consistent with stable inflation over time and we need to pay some attention to the challenge of how we approach our longer - term goal of achieving and maintaining price stability. first i will discuss the risks in the outlook. next i will consider some explanations for the surprisingly good recent inflation performance and implications for inflation going