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Thank you, David. And thank you to the Brookings Institution for hosting me today. I am especially grateful to return to the place where, in my first job as an aspiring economist, I was a research assistant for Alice Rivlin over three decades ago. Today, I would like to talk about the Board's work in pursuit of financial stability, which is critical to the well-being of households, firms, and the broader economy.1 Following the financial crisis of 2007–09, a broad set of reforms were put in place to bolster financial stability. To ensure an ongoing focus on that area, the Board established its Committee on Financial Stability as a venue for Governors to discuss related developments and policy issues. I recently became the chair of this committee and will share with you my current views on financial stability and touch on a couple of emerging issues. Enhancing the public's understanding of our work on financial stability is important for the transparency and accountability of our efforts. That is why we communicate our financial stability work prominently in our Financial Stability Report, which was most recently published last month and provides more detail on some of the developments I will review today.2 Financial Stability at the Federal Reserve As the U.S. and global financial system continues to grow and evolve in complexity, the Fed's work on financial stability only becomes more important. A stable and resilient financial system is essential for the Federal Reserve to achieve its dual mandate of maximum-employment and price-stability. Our financial stability work also informs our approach and priorities to the supervision and regulation of banking organizations, our coordination with domestic regulatory agencies, and our engagements with international bodies such as the Financial Stability Board. Financial Stability Framework post: FED'S COOK: FIRMS HAVE AMPLE EARNINGS TO COVER DEBT PAYMENTS. post: FED’S COOK, IN REVIEW OF FINANCIAL STABILITY, SAYS HOUSEHOLDS REMAIN RESILIENT BUT SHE IS WATCHING RISING DELINQUENCY RATES #News #Markets #live post: FED'S COOK: OVERALL RISK FROM CRE IS CONSIDERED “SIZABLE BUT MANAGEABLE”.
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Japan's economy has recovered moderately, although some weakness has been seen in part. It is likely to keep growing at a pace above its potential growth rate, as a virtuous cycle from income to spending gradually intensifies. Upward revisions have been observed in the outlook for overseas economies overall, particularly for the U.S. economy. Although private consumption has been relatively weak, reflecting price rises, it is likely to regain momentum, given that momentum in wage hikes has been strong recently. If firms postpone business fixed investment due to factors such as supply-side constraints, this could lead them to lose business opportunities and hinder improvement in their productivity, and in turn create a risk that firms will not be able to secure enough resources for wage hikes. Therefore, attention is warranted on developments in business fixed investment. While the output gap has been at around 0 percent, the weighted average of the diffusion indexes (DIs) for production capacity and employment conditions in the Tankan (Short-Term Economic Survey of Enterprises in Japan) indicates that shortages of production capacity and labor have been at historically high levels. In determining whether Japan's economy will keep growing steadily at a pace above its potential growth rate throughout the projection period, it post: BOJ MEMBER SUGGESTS RATE PATH MAY BE HIGHER THAN MARKET EXPECTATIONS. post: BOJ MEMBER EMPHASIZES NEED FOR APPROPRIATE RATE INCREASE AT THE RIGHT TIME
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