I expect the unemployment rate to edge down to slightly below 3.5 percent next year, the lowest level in nearly 50 years. In keeping with this strong economic outlook, I expect price inflation to move up a bit above 2 percent. Importantly, I don’t see any signs of greater inflationary pressures on the horizon. This is all very good news, especially in the context of the slow recovery and low inflation that has persisted in the years since the financial crisis. In light of the progress we’ve made on our monetary policy goals, the FOMC has been in the process of gradually normalizing monetary policy for the past few years. Looking forward, I continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and achievement of our dual mandate goals. Since first raising rates from near-zero back in December 2015, the FOMC has continued to 1/4  BIS central bankers' speeches  raise the target range for the federal funds rate as the economy has improved and moved toward our maximum employment and 2 percent longer-run inflation objective. Our most recent rate increase came in late September, when the FOMC set the target range between 2 and 2.25 percent.2 Throughout, we’ve repeatedly stressed that we foresaw this to be a process of gradual normalization, reflecting the balancing of risks to reaching our goals.
Therefore, we devote considerable effort to monitoring and analysis of developments around the world to understand how our actions affect the global economy and indirectly feed back to our own economy. These considerations play an important role in my thinking about the economic outlook and the appropriate path for monetary policy, as well as how we best communicate our perspectives and plans. Moreover, we actively engage with international counterparts in a range of forums, such as today’s. These exchanges help us understand economic and financial conditions affecting our respective regions and provide opportunities to share perspectives and insights. A key lesson about policy-making in an interconnected world is that transparency and open lines of communication are critical to minimizing misunderstanding, market disruption, and volatility that can interfere with our common goals of having strong and stable economies. As I have mentioned a number of times already, effective communication that provides clarity and predictability to our policy actions is a critical component of successful policy-making. Conclusion Monetary policy-making has perhaps never been more challenging than it was following the financial crisis. But, as we move toward more “normal” conduct of monetary policy, we must not rest easy. We will confront our own fair share of future challenges. The most important monetary policy challenge in the United States today is sustaining the long economic expansion 3/4  BIS central bankers' speeches  without allowing risks to grow that ultimately undermine economic prosperity.