*  *  *  The U.S. financial system has been in turmoil during the past 16 months. Credit conditions have tightened and asset values have declined, contributing substantially, in turn, to the weakening of economic activity. As the participants in this conference are keenly aware, I am sure, housing and housing finance played a central role in precipitating the current crisis.
Therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted. Allow me to explain our assessment in greater detail. Turning first to the economic analysis, the latest indicators and survey data suggest that the economic expansion has continued into 2007 and remains solid and broad-based.