The resilience of the financial system in the face of larger shocks has yet to be fully tested. Although credit risk will be less concentrated on banks, the financial risks that are being created by the system may actually be greater.
Our overarching focus is using our tools to bring inflation back down to our 2 percent goal and to keep longer-term inflation expectations well anchored. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.