Recent inflation developments While the labor market has moved closer to the FOMC’s mandated goal of maximum employment, less progress has been made in moving inflation close to the FOMC’s longerrun objective of 2 percent, which the Committee considers to be consistent with our mandated goal of price stability.
A related challenge to the inflation targeting framework has been dealing with large exchange rate changes which were primarily responsible for the deviations from target experienced in 2002–3 and to some extent in 2014. Although pass-through from the exchange rate to CPI has declined significantly over the period, it remains an important driver  2  BIS central bankers’ speeches  of inflation.