The Federal Reserve has already begun the transition from an accommodative policy stance to a neutral one, more consistent with sustained non-inflationary economic growth. If the economy evolves as I have suggested here, then I expect we will continue on our present course of moving the federal funds rate toward neutrality.

The precise course that we take depends on the precise course the economy takes. If signs of heightened price pressure emerge on a consistent basis, we will need to consider quickening the pace at which we move toward policy neutrality

As the economy moves along this path of self-sustaining growth, the Federal Reserve is steadily removing the accommodative monetary policy that had been in place over the past few years and is moving toward a more neutral policy stance.

In the months following the sharp stock market decline, it was unclear how rapidly economic activity was decelerating. Once it became clear, the Federal Reserve responded aggressively...On the other side, in light of the uncertain and attenuated pattern of recovery and expansion, the Federal Reserve has taken a gradualist approach to removing the monetary accommodation and returning to a more neutral policy stance.

There is certainly more ground to cover, because even with these increases, policy remains accommodative. But given the low level of inflation, well-contained inflationary expectations, and the remaining slack in the economy, we believe we can remove the remaining policy accommodation at a pace that is likely to be measured.

One may reasonably ask when this process of removing policy accommodation will stop. This question is not straightforward to answer. In particular, it is not helpful, in my view, to imagine the existence of some fixed target for the funds rate toward which policy should inexorably march. Instead, the correct procedure for setting policy requires the FOMC to continually update its forecast for the economy, conditional on all relevant information and on a provisional future path for monetary policy. The funds rate will have reached an appropriate and sustainable level when, first, the outlook is consistent with the Committee's economic goals and, second, the slope of the term structure of interest rates is approximately normal, as best as can be determined. With this definition in mind, one can search for indications of where the "neutral" funds rate is likely to be at a given point in time. For example, the fact that far future short-term interest rates have recently declined fairly significantly suggests that, in the view of the markets at least, the neutral funds rate may be somewhat lower today than it was in the past.  The most important lesson, however, is that the neutral policy rate depends on both current and prospective economic conditions. Accordingly, the neutral rate is not a constant or a fixed objective but will change as the economy and economic forecasts evolve.

Unlike some in the marketplace, I don't think there is a unique number we are going to. I think the neutral fed funds rate will depend on the economy, spending and technology.

In my opinion, the present fed funds rate is still accommodative, and with an economic expansion that now seems to be well established I believe the FOMC still has a ways to go in recalibrating monetary policy.

We don't know what the actual [neutral rate] number is, but it is that interest rate which creates a degree of stability in the economy and removes any sense of excess which would create inflationary pressures.

We believe that that so-called normative rate or whatever you want to call it is not...stable. It does move around.

The current policy stance remains accommodative. Over time, the degree of accommodation will have to diminish, with policy reverting toward so-called “neutral” for inflation to remain well contained. It’s uncertain exactly what the neutral range is, but a common estimate is 3-5 percent.

It should be obvious that the closer the actual rate gets to the neutral range, the more carefully we will need to consider each successive increase...the pace of removing policy accommodation must, in reality, depend on how economic activity and inflation actually develop.

 These developments [economic activity and inflation] could affect the Committee’s judgment concerning the momentum in aggregate demand or supply and thus the real federal funds rate corresponding to a neutral policy stance.

We've been talking about getting policy back to a neutral stance...It's been pretty accommodating for a while...The fed-funds rate target certainly has to be higher than it is right now, but exactly how high I'm not willing to be pinned down on at the moment.

We have had a very accommodative monetary policy stance. And as the expansion continues, we have been moving toward a more neutral one.