Moreover, many things could happen in the coming months to alter the outlook, as the recent fluctuations in energy markets and swings in GDP growth illustrate. Looking to the medium term, I am less optimistic about the prospects for core PCE inflation to move much below 2 percent in the absence of a determined effort by monetary policy.
For the most part, this assessment – which I should stress is subject to considerable uncertainty – flows from my view that long-term expectations appear to be well anchored at a level not very far below the current rate of inflation.