The twelve-month change of the total PCE deflator was just 0.3 percent in February, with the core PCE deflator at just 1.4 percent. Despite these low readings, my expectation is that inflation will begin to firm later this year. Importantly, most of the impact from the decline in energy prices that has weighed down overall inflation is likely over. Although the appreciation of the dollar may cause some further softness in import prices, the continued decline in resource slack as the economy expands should push in the opposite direction. We are already seeing some firming in rent inflation as rental vacancy rates have returned to more normal levels and employment and income growth have strengthened. Longer-term household inflation expectations have been well maintained through this period of very low inflation as shown in our Survey of Consumer Expectations. This should reinforce the effect of a higher level of overall resource utilization in slowly pushing inflation back towards the FOMC’s 2 percent objective. Monetary policy As the FOMC has consistently communicated, decisions on monetary policy, such as the timing of lift-off will, depend on how the economic outlook evolves – in particular with respect to the labor market and inflation. As I have discussed, the labor market has improved substantially over the past few years and I expect to see inflation begin to firm later this year.
During the previous discussions I had the opportunity to point out that these questions had been raised at least twenty years before, and they have been answered repeatedly, even in the last months and weeks. For example, just a few months ago the Economic and Social Council to the National Assembly approved an analysis about the implications of Bulgaria's euro area accession for the economic development, inflation and incomes in the country. This analysis was conducted at the request of the Speaker of the National Assembly and was brought to the attention of the members of Parliament. Let me highlight that by law the Economic and Social Council is a consultative body expressing the will of civil society organisations regarding the economic and social development, with its members representing trade unions, employers, industry organisations, organisations of pensioners, the socially weak and the disabled, women's organisations, as well as distinguished independent scientists who are specialists on the issues of the economic and social policy. The conclusion made by the Economic and Social Council, which represents such a wide variety of civil society organisations, is that the benefits from Bulgaria's euro area membership far outweigh the risks and costs. 1/5  BIS - Central bankers' speeches  Quite recently, a collective monograph 'Challenges facing the Bulgarian economy on its way to euro area membership' was published by Sofia University to mark the 120th anniversary of the Department of Economics within the Faculty of Economics of Sofia University – the oldest department of economics in Bulgaria.