If oil prices and the dollar remain broadly stable, inflation should move up further over time to our 2 percent objective. Inflation expectations seem to be under some downward pressure. Some survey-based measures are at the low end of their recent historical ranges. Market-based measures of longer-term breakevens have declined significantly since mid-2014 and stand near all-time lows.
While I see expectations as staying reasonably well anchored, it is essential that they remain so and that inflation return over time to the 2 percent objective. The easing in global financial conditions since mid-February and the associated waning in downside risks are welcome, and in part reflect expectations that the FOMC would move more slowly in removing monetary accommodation.