Speech
October 20, 2017
A Challenging Decade and a Question for the Future
Chair Janet L. Yellen
At the 2017 Herbert Stein Memorial Lecture, National Economists Club, Washington, D.C.
https://www.federalreserve.gov/newsevents/speech/yellen20171020a.htm
Conclusion
Let me conclude with a brief summary. As a result of the Great Recession, the Federal Reserve has
confronted two key challenges over the past several years: One, the FOMC had to provide additional
policy accommodation after short-term interest rates reached their effective lower bound; and two,
subsequently, as we made progress toward the achievement of our mandate, we had to start scaling
back that accommodation in the presence of a vastly expanded Federal Reserve balance sheet.

Today I highlighted two points about the FOMC's experience with those challenges. First, the monetary
policy tools that the Federal Reserve deployed in the immediate aftermath of the crisis--explicit forward
rate guidance, large-scale asset purchases, and the payment of interest on excess reserves--have
helped us overcome these challenges.

Second, in light of evidence suggesting that the neutral level of short-term interest rates is significantly
lower than it was in previous decades, the likelihood that future monetary policymakers will have to
confront those two challenges again is uncomfortably high. For this reason, we must keep our
unconventional policy tools ready to be deployed again should short-term interest rates return
to their effective lower bound.