Turning to their wage-setting stance, the high corporate profits have continued to positively affect employee income, and the mechanism in which inflation rises moderately accompanied by wage increases has continued to operate. In such a situation, medium- to long-term inflation expectations are also likely to return to an increasing trend and gradually converge to around 2 percent – the price stability target. III.
*  *  *  Chairman Hensarling, Ranking Member Waters, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress. I will discuss current economic conditions and the outlook and then turn to monetary policy. I’ll finish with a short summary of our ongoing work on regulatory reform.