As the deterioration in financial markets increasingly has threatened to hold down spending and employment, the FOMC has eased monetary policy, reducing the federal funds rate target by 2-1/4 percentage points since the turmoil erupted in August.
We have to be very alert that they do not materialise. At the moment I do not see any significant materialising of second-round effects and I do not see un-anchoring of inflation expectations. But this is no time for complacency. We have to be permanently alert to avoid the materialisation of such risks.