No doubt, the sweeping scope and complexity of these reforms has some thinking that the new regulatory architecture is excessively tight, at least at first glance. Of course, optimizing the scope and intensity of regulation was never going to be easy. The new regulatory architecture is the outcome of a political process with many trade-offs and significant differences across financial systems.
In the projections prepared for our June meeting, most FOMC participants anticipated that economic conditions would evolve over time in a way that will warrant gradual increases in the federal funds rate as the headwinds that still restrain real activity continue to diminish and inflation rises.