This process will be based on the FOMC's "Principles for Reducing the Size of the Federal Reserve's Balance Sheet" released in January.6 A key principle is to reduce the balance sheet in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account. I expect that this process of reducing the size of the balance sheet can begin as soon as the May FOMC meeting. Our monetary policy actions, combined with those of other countries, will help bring demand for labor and products in closer alignment with available supply. As this reduction in demand-induced price pressures takes effect and supply constraints gradually ease, I anticipate inflation readings will begin to decline later this year, although this process will take time to fully play out. For 2022 as a whole, I expect PCE inflation to be around 4 percent, then decline to about 2½ percent in 2023, before returning close to our 2 percent longer-run goal in 2024. These actions should enable us to manage the proverbial soft landing in a way that maintains a sustained strong economy and labor market. Both are well positioned to withstand tighter monetary policy. In fact, I expect the economy to continue to grow this year and for the unemployment rate to remain close to its current level. Conclusion These are uncertain times, and the policy questions we face are challenging. But we have learned the lessons of high inflation from the past.
With low unemployment, solid wage growth, and ample job openings, all indicators show that the strength of the labor market is at a level consistent with my view of maximum employment. Inflationary Pressures The other side of our mandate is price stability, and this is where our greatest challenge now lies. Inflation is far too high. In February, inflation-as measured by the personal consumption expenditures (PCE) price index-was nearly 6½ percent. And high inflation is a key concern in many countries around the world. Even before Russia's invasion of Ukraine, the rapid global economic rebound had driven up prices for oil and many other commodities. Higher inflation is especially detrimental for those who are least able to meet the growing cost of essentials like food, housing, and transportation. The war in Ukraine and the global response present even greater challenges and uncertainty. For example, Russia and Ukraine are large exporters of key materials, including neon, palladium, and platinum. Those materials are used in the production of a wide array of products, from auto parts to computer chips. Even before the war,  2/5  BIS - Central bankers' speeches  manufacturers were confronting shortages of important inputs. Further disruptions to these key products could create spillovers to economies across the globe. But there are differences in the ways in which countries are experiencing inflation. In the United States, we are now seeing elevated inflation across many categories of goods and services.