This common-sense risk-management approach has served the Committee well in the past. I will turn now from the near-term outlook to the question of how the economy will perform over the long haul. Longer-Term Challenges and Opportunities From 1991 through 2007, the economy expanded annually at about 3 percent, similar to the pace for much of second half of the 20th century.
These prices, terms and credit conditions may reflect solid economic fundamentals – low output and inflation uncertainty, healthy corporate balance sheets, and corporate profits that exceed market expectations – and if so, they may help to ease the effects of fluctuations in liquidity should they occur.