The year-over-year core PCE inflation rate is 1.6 percent and is expected to stay near that level – or even higher – over the course of the coming year.3 So, since November 2010, the unemployment rate and the outlook for the unemployment rate have improved. Inflation and the outlook for inflation have both risen closer to 2 percent.
As I’ve just discussed, in response to these changes in economic conditions, the Committee should have lowered the level of monetary accommodation over the course of the year. Instead, through actions taken at its last two meetings, the Committee has raised the level of monetary accommodation.