By definition, multifactor productivity includes technical change, organizational improvements, cyclical factors, and myriad other influences on output per hour, apart from capital investment. With capital spending sluggish over the past year, and no evident acceleration of worker quality, it is likely that growth of multifactor productivity accounts for an appreciable portion of the rise in output per hour.
The process of removing policy accommodation in current circumstances will involve both increases in the target range of the federal funds rate and reduction in the size of the Federal Reserve’s balance sheet. As the FOMC noted in January, the federal funds rate is our primary means of adjusting the stance of monetary policy.