in the economy in terms of getting supply and demand in better balance and bringing inflation back down to the federal open market committee's ( fomc's ) 2 percent longer - run goal. finally, i'll share my view on where the economy is headed. now i need to provide the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the fomc or others in the federal reserve system. 1 / 5 bis - central bankers'speeches the dual mandate as i never tire in saying, the federal reserve's monetary policy goals are clear : maximum employment and price stability. the overarching objective of monetary policy today is to bring inflation down to 2 percent over time while maintaining a strong labor market. economic progress the good news is that over the past two years, we have made considerable progress toward these objectives. after last year's strong gdp and job growth, incoming data point to a slowing, but still solid pace of growth in economic activity in the first half of this year. demand - supply imbalances have diminished. global supply chains, which were severely disrupted during the pandemic and early in the recovery, have mostly returned to normal. at the same time, inflation has come down considerably. let me dive deeper into the maximum employment side of our mandate. first and foremost, the labor market remains quite strong. labor supply has been boosted by high levels of labor force participation among individuals aged 25 - 54 years, as well as by increased immigration flows. the unemployment rate has been under 4 percent for more than two years - the longest such stretch in over 50 years. this measure - now at 3. 9 percent - is close to my estimate for the unemployment rate that is likely to prevail over the longer run. even as the economy and labor market remain strong, various labor market indicators show that demand - supply imbalances that emerged following the pandemic continue to recede. most of these measures have returned to pre - pandemic levels. but two are still signaling a tighter labor market than before the pandemic : job vacancies and wage growth. after skyrocketing over the course of 2021 and early 2022, the rate of job openings has subsequently steadily declined, but still remains elevated relative to prepandemic levels. wage growth has displayed a similar pattern, including for so - called job switchers for whom wage growth is highly sensitive to labor market conditions

reassessment then feeds back to current spending and saving decisions. a fourth reason why the recovery has been slower than expected may be that we overestimated the capacity for fiscal policy to continue to provide support to growth until a vigorous recovery was achieved. on the fiscal side, the authorities can cut taxes or increase spending to support income and demand during the deleveraging phase that follows the financial crisis. but the ability of such stimulus to continue to support economic activity ultimately encounters budgetary limits. for example, the need to keep the long - term fiscal trajectory on a sustainable path limits the size and duration of federal fiscal stimulus measures. for state and local governments, the statutory requirements for balanced budgets meant that fiscal policies turned restrictive relatively quickly once budget surpluses and rainy day funds were exhausted, and this was only temporarily mitigated by federal transfers to the states as part of the initial fiscal stimulus program. fiscal policy is now a drag rather than a support to growth in the united states, and this will likely continue. bis central bankers ’ speeches monetary policy i would give each of these four explanations some weight for why the recovery has been consistently weaker than expected. but i would add a fifth, monetary policy, while highly accommodative by historic standards, may still not have been sufficiently accommodative given the economic circumstances. now let me be clear. i believe the evidence overwhelmingly indicates that our monetary policy has been effective in easing financial conditions and supporting economic activity. after reducing the traditional policy tool, the target for the overnight federal funds rate, to close to zero, the fed has aggressively employed two complementary types of non - traditional tools – asset purchases and forward guidance on the policy rate – to provide additional stimulus through their effects on long term rates and various risk premia. effective forward guidance on interest rates causes market participants to lower their expectations and uncertainty about future path of interest rates and to anticipate that easier financial conditions will persist well in to the future. this pushes down the yield curve and leads to easier financial conditions. federal reserve asset purchases also make financial conditions more accommodative. such purchases, by taking duration out of private hands, push down term premia and lead to lower long - term rates than would otherwise be the case for any given economic outlook. agency mbs ( mortgage - backed securities ) purchases absorb prepayment risk and reduce secondary and primary mortgage rates, stimulating demand for housing and increasing purchasing power through refinancing. lower long