I’ll be taking stock on how we are doing with respect to our employment and inflation goals and whether it will be appropriate to continue purchasing longer-dated Treasuries when that program concludes. I think that this will depend on whether we have seen a substantial improvement in the labor market outlook  6  BIS central bankers’ speeches  in the interim and any further evidence about the costs and benefits of continuing such purchases. In terms of our monetary policy regime, the FOMC statement noted that the Committee expects to maintain a highly accommodative stance of monetary policy “for a considerable time after the economic recovery strengthens.” This is important because in situations such as the one we find ourselves in today, when monetary policy is somewhat constrained because we cannot lower the federal funds rate below zero, one of the most powerful things a central bank can do is to provide guidance as to how it will behave in the future. In this respect, I am pleased that we have drawn a sharper distinction between what we expect the economy to look like in a few years time and how we expect to set policy based on that outlook. In particular, when the Committee extended the period for which it anticipates keeping the federal funds rate at exceptionally low levels – which I interpret to mean the current range of zero to 25 basis points – to “at least through mid-2015,” I don’t think this was due to greater pessimism about the economic outlook.
I’ll also meet with the leaders of New Jersey Community Capital to learn about their cutting-edge programs for helping distressed homeowners and then I’ll speak to the students, faculty and alumni at Montclair State University. In addition, my colleagues and I at the New York Fed continually track conditions in our District, and we have created a number of tools for that purpose. For example, my staff produces indices of economic activity for New York City, New York State and New Jersey. We also track local household credit conditions, including the amount and type of personal debt and whether payments are being made in a timely way. We also conduct a periodic poll about the credit needs of small businesses, which are an important source of new jobs in the region. In our latest poll of several hundred firms, many report that they did not apply for credit because they were “discouraged.” Perhaps surprisingly, many of these non-applicants have credit profiles similar to other firms who successfully sought credit. This finding suggests that the demand for credit could pick up as some “discouraged” firms learn that they might be able to obtain credit now. If you, as a representative of a small business, would like to participate in our next poll, please pass your card to my colleagues, who are in the audience, or see me after the speech and we will be glad to add you as a respondent.