. s. economy by continuing to add to the federal reserve ’ s holdings of longer - term securities. accordingly, the committee continued to reduce the pace of asset purchases over the course of the year, ending its purchases in october. that step, however, did not mark an immediate shift toward tighter monetary policy because we also indicated then that we did not expect to raise interest rates for a considerable time after the end of our securities purchases. moreover, as the committee explained in a set of “ normalization principles ” issued that september, the intention was to maintain the overall size of the federal reserve ’ s balance sheet at an elevated level until sometime after the fomc had begun to raise its target for the federal funds rate. 9 we decided that maintaining a highly accommodative stance of monetary policy remained appropriate because, while the u. s. economy was stronger and closer to meeting our statutory goals, we saw significant room for improvement. in particular, the unemployment rate still stood above our assessment of its longer - run normal level — that is, the unemployment rate that we expect to prevail when the economy is operating at maximum employment — and inflation remained below the 2 percent objective. because my colleagues and i expected that labor market conditions would continue to improve and that inflation would move back to 2 percent over the medium term, we anticipated that the time was approaching when the economy would be strong enough that we should start to scale back our support. indeed, the fomc ’ s june 2014 summary of economic projections ( sep ) reported that nearly all fomc participants saw a higher federal funds rate as appropriate in the next calendar year. in contrast, only two participants in december 2013 thought that it would be appropriate to start raising that rate in the next calendar year. 3 / 8 bis central bankers'speeches uneven progress in 2015 and into 2016 in 2015, the unemployment rate fell significantly faster than we generally had anticipated in 2014. however, a series of unanticipated global developments beginning in the second half of 2014 — including a prolonged decline in oil prices, a sizable appreciation of the dollar, and financial market turbulence emanating from abroad — ended up having adverse implications for the outlook for inflation and economic activity in the united states, prompting the fomc to remove monetary policy accommodation at a slower pace than we had anticipated in mid - 2014. u. s. gross domestic product ( gdp ) growth generally surprised to the downside in 2015, reflecting, in part, weak

notably in the markets for over - the - counter ( otc ) derivatives and in short - term funding markets. the federal reserve, together with other regulators and the private sector, is engaged in a broad effort to strengthen the financial infrastructure. for example, since september 2005, the federal reserve bank of new york has been leading a major joint initiative by both the public and private sectors to improve arrangements for clearing and settling credit default swaps and other otc derivatives. the federal reserve and other authorities also are focusing on enhancing the resilience of the markets for tri - party repurchase agreements, in which the primary dealers and other large banks and broker - dealers obtain very large amounts of secured financing from money funds and other short - term, risk - averse investors. in these efforts, we aim not only to make the financial system better able to withstand future shocks but also to mitigate moral hazard and the problem of " too big to fail, " by reducing the range of circumstances in which systemic stability concerns might prompt government intervention. more generally, the stability of the broader financial system requires key payment and settlement systems to operate smoothly under stress and to effectively manage counterparty risk. currently, the federal reserve relies on a patchwork of authorities, largely derived from under the memorandum of understanding, the sec and the fed will freely share information and analyses pertaining to the financial conditions of primary dealers. the two agencies have also agreed to work jointly with the firms to support their continued efforts to strengthen their balance sheets, their liquidity, and their riskmanagement practices. see : board of governors of the federal reserve system and securities and exchange commission ( 2008 ), " federal reserve and sec issue memorandum of understanding to deepen information sharing and cooperation ", press release, july 7. bank - affiliated primary dealers are already subject to mandatory consolidated supervision, but the focus of that supervision has been on limiting risks to the banks and other insured depository institutions within the holding company. existing provisions may need to be modified to provide regulatory authority to assess and limit risks to all functionally regulated entities, including securities subsidiaries. our role as a banking supervisor, as well as on moral suasion to help ensure that the various payment and settlement systems have the necessary procedures and controls in place to manage the risks they face. by contrast, many major central banks around the world have an explicit statutory basis for their oversight of payment and settlement systems. because robust payment and settlement systems are vital for financial stability, the congress