The problem for policymakers is to identify, in real time, any changes in the prospective growth rate of potential output and to anticipate the accompanying effects on the balance of supply and demand. Inflation and monetary policy Overall (or "headline") inflation has slowed significantly since earlier this year; indeed, in October the consumer price index fell by 1/2 percent for the second consecutive month.
This improvement is largely the result of the recent declines in energy prices. The price of crude oil has fallen about onefourth since its recent peak, reflecting some easing of geopolitical concerns and other factors.