FOMC Actions Against this backdrop, the FOMC has taken decisive actions to curb demand, restore balance to the economy, and bring inflation down. Last month, the FOMC raised the target range for the federal funds rate to 4-3/4 to 5 percent, its ninth consecutive increase. In its post-meeting statement, the FOMC said it "will closely monitor incoming information and assess the implications for monetary policy. "4  2/4  BIS - Central bankers' speeches  The Committee also said it "anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time." According to the median projections in the FOMC's March Summary of Economic Projections, the stance of monetary policy remains restrictive this year and next year.5 In addition, the FOMC said it will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities, according to the framework announced last May.6  Economic Outlook Because of the lag between policy actions and their effects, it will take some time for the FOMC's actions to bring inflation down to our 2 percent target. With inflation expectations well anchored, I expect inflation to decline to around 3-1/4 percent this year, before moving to our longer-run goal over the next two years. Turning to GDP, the data flow for the first quarter indicates that the economy continues to expand at a solid pace.
Indeed, throughout this period of high inflation, one of the bright spots is that various measures of longer-run inflation expectations have remained remarkably well anchored and consistent with our 2 percent target.2  Imbalances Endure Our most important policy tool is the setting of the target range for the federal funds rate, which influences demand for goods and services by affecting borrowing costs. So far, tighter monetary policy from the Federal Reserve and central banks around the world is helping to bring a better balance between supply and demand. Inflation has declined in a number of sectors, particularly for many categories of commodities and goods. In addition, the supply-chain bottlenecks that had constrained the supply of goods have largely dissipated. For example, the New York Fed's Global Supply Chain Pressure Index has declined to a level that indicates supply pressures are now actually somewhat lower than normal.3 I hear the same from business leaders from around the Federal Reserve's Second District, who confirm that supply chains have improved considerably. At the same time, data on rents for new leases provide early signs of slowing inflation for shelter. This is important because shelter inflation had been a significant driver of higher inflation over the past year. However, despite the moderation of inflation, imbalances endure, with overall demand still exceeding supply in the economy. This is seen in the inflation rate for core services excluding housing, which has been running around 4-1/2 percent since last August.