In particular, there remains some uncertainty as to whether the current unemployment rate will prove consistent with stable inflation over time and we need to pay some attention to the challenge of how we approach our longer-term goal of achieving and maintaining price stability. First I will discuss the risks in the outlook.
Next I will consider some explanations for the surprisingly good recent inflation performance and implications for inflation going forward. I’ll end with a discussion of challenges for the Federal Reserve: three it has faced and met in this expansion, one still in play, and one that may deserve further attention.