The stronger second-quarter growth means that the economy was operating close to its productive capacity, or potential—a concept I will explain in a minute. And inflation has been very close to our 2 percent target. Inflation and the Phillips curve Now, let me spend a few minutes on the relationship between inflation and economic growth.
This issue has been in the news lately because inflation rates in the United States, the euro area and Japan have stayed low, even though their economies had been strengthening, at least until recently. In particular, there has been much  -4debate about the continued existence of what economists call the Phillips curve.