*  *  *  Introduction From the start of the crisis in summer 2007, monetary policy has faced a number of challenges, linked particularly to the interaction between the development of the real economy and the turbulence in the financial markets.
As usual, my remarks reflect only my own views and are not intended to reflect those of the Federal Open Market Committee (FOMC) or of anyone else associated with the Federal Reserve System. 1 What is the optimal level of the inflation rate? Research in monetary economics usually specifies monetary policy objectives in terms of stabilizing both inflation and economic activity.