John Williams, Speech: Our Work Is Not Yet Done

Inflation

“As tighter policy actions continue to work to restore balance to supply and demand, I expect PCE inflation to fall to 3 percent in 2023, before moving closer to our 2 percent longer-run goal in the next few years.”

“Declines in commodity and goods prices will not be enough to bring inflation to 2 percent on a sustained basis. We need all the gears turning at the right pace to restore balance between demand and supply in the entire economy. We still have some way to go to achieve that goal. And it will likely entail a period of subdued growth and some softening of labor market conditions.”

GDP

“I expect real GDP growth to come in around 1 percent for 2023.”

Jobs

“And I anticipate the unemployment rate to edge up over the next year to between 4 and 4-1/2 percent.”

Inflation Expectations

“One aspect of inflation that’s important for achieving and sustaining price stability is the anchoring of inflation expectations. Since 2012, the FOMC has clearly and consistently communicated its resolute commitment to its 2 percent longer-run inflation goal and the importance of well-anchored inflation expectations consistent with that goal. ⁵ This provides a “North Star” for our policy decisions and has helped keep longer-term inflation expectations well anchored.⁶ According to our most recent Survey of Consumer Expectations, three-year-ahead inflation expectations are now where they were before the sharp increase in inflation that started in 2021, and one-year-ahead expectations have been trending down since the middle of last year.^7”