14  The idea of robust control is that when making decisions, one should take into account that the models being used to guide one’s decisions may be wrong. For discussions of robust control and what it might imply about the conduct of macroeconomic policy in various scenarios, see Hansen and Sargent (2008, 2014). BIS central bankers’ speeches  5  How do I think policy should balance these divergent risks? How should these risks affect my views about how to follow the FOMC strategy of pursuing a balanced approach to achieving our policy goals? In my mind, current circumstances and a weighing of alternative risks mean that a balanced policy approach calls for being patient in reducing accommodation – that is, being patient about when we first increase the federal funds rate and being patient about setting the pace of rate increases once we have begun to move. I know from the NABE Economic Policy Survey that many of you disagree with this view. 15 Let me explain how I get there. Proceed cautiously in normalizing policy To say the least, conducting monetary policy at the ZLB has been a difficult experience that we all want to avoid repeating unnecessarily. In the winter of 2009, with the unemployment rate soaring to double digits, the Fed would have very much liked to lower the nominal federal funds rate an additional 300 basis points; but we couldn’t because the rate was already at zero.
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