Basic principles of risk management in a low neutral rate environment with compressed conventional policy space would argue for softening the expected path of policy when risks shift to the downside.3  Our Review With recent indicators suggesting the expansion is continuing at a solid pace and unemployment at a 50-year low, inflation has not yet moved to our goal on a sustained basis.
In many ways, that can be viewed as an opportunity, with the sustained expansion providing critical job opportunities to a broader set of applicants. In parallel, it is also vital that a central bank meets its inflation target on a sustained basis, which will provide more capacity to buffer the economy if it encounters headwinds.