Similarly, in the United States, the rate of change in the headline personal consumption expenditures (PCE) deflator has recently been more or less flat, at around 0 percent year-onyear, but that in the core PCE deflator (defined as all items less food and energy) has been around 1.3 percent.
Let me turn now to the implications of these developments for monetary policy. The FOMC has responded aggressively to the weaker outlook for economic activity, having reduced its target for the federal funds rate by 225 basis points since last summer.