As for price developments, the rates of increase in the core consumer price index (CPI) and in the core personal consumption expenditure (PCE) deflator have been at relatively high levels. Both upside and downside risks currently coexist in the U.S. economy, surrounding the inflation situation and the economic growth rate, respectively.
Nevertheless, given the robustness and the flexibility of the economy it is likely to avoid a significant slowdown in the growth rate and to realize a soft landing, returning to its potential growth path from the current 2.0-2.5 percent by late 2007, with a gradual decline in the rate of inflation.