Looking ahead, the most likely outcome for the coming quarters is, in my judgment, a continued moderate rate of economic expansion accompanied by some easing of pressures on resources. With inflation expectations contained, I would expect such an economic environment to foster a gradual slowing over time in the rate of core consumer price inflation.
However, the actual path for economic activity and inflation could, at times, be uneven; and as is the case for all forecasts, it involves a number of risks and uncertainties on both the downside and the upside. Turning first to the prospects for economic activity, two particular areas have emerged recently that have heightened uncertainty about the near-term outlook.