inflation. i've been using the analogy of peeling an onion's layers to describe inflation - both how it rose and how it has since moderated. 2 in my " inflation onion, " there are three layers. each layer represents a major category of inflation : prices of globally traded commodities ; prices of products or durable goods like appliances, furniture, and cars ; and prices of core services. the sharp rise in inflation that we saw in 2021 and 2022 was in large part due to aftereffects of the pandemic, as well as russia's war on ukraine and consequent actions. once those effects began to dissipate, the layers of the onion started to adjust in turn. while each inflation layer normalized at a different speed, they all moved in the right direction. this broad - based downward movement has brought the overall inflation rate back down closer to our 2 percent longer - run goal. this disinflation process shows up clearly in the data. the 12 - month percent change in the personal consumption expenditures ( pce ) price index has declined from its 40 - year high of just above 7 percent in mid - 2022 to 2. 5 percent in july. measures of underlying inflation, like core pce inflation and the new york fed's multivariate core trend inflation, similarly show a sizable decline over the past two years to around 2 - 1 / 2 percent today. 3 the decrease in inflation has benefited from a moderation in demand and improvements in supply that together have reduced supply - demand imbalances, both here in the u. s. and internationally. equally reassuringly, inflation expectations remain well anchored. the new york fed's survey of consumer expectations ( sce ) shows that inflation expectations have remained in their pre - covid ranges at all horizons in recent months. 4 other measures of inflation expectations, both survey - and market - based, give a similar signal. and the atlanta fed's measure of business inflation expectations, which reflects the thinking of businesses in setting prices, has similarly returned to levels near its average over the 2012 - 2019 period. 5 the disinflation phenomenon is not unique to the united states. canada, the united kingdom, and most european economies experienced historically high inflation over the past few years and have similarly seen rapid declines. the global supply disruptions experienced following the pandemic and war in ukraine amplified the rise in inflation, and the restoration of supply and demand balance has accelerated its

john c williams :'e'is for equipoise remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the council on foreign relations, new york city, 6 september 2024. * * * as prepared for delivery introduction good morning. i always appreciate the opportunity to speak before members of the council on foreign relations. 1 before i get started, let me give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the federal open market committee ( fomc ) or others in the federal reserve system. just as you'd expect, i'll be speaking today about the " e " word - by which, of course, i mean the economy. i'll talk about where it's headed, and the process of getting supply and demand in better balance and bringing inflation back down to the fomc's 2 percent longer - run goal. i'll also discuss the progress made toward the federal reserve's dual mandate goals of maximum employment and price stability, as well as the path ahead for monetary policy. the fed's dual mandate i'll start by discussing where the economy stands right now, broadly speaking. since it's back - to - school season, i'll throw out another " e " word that you may find on a middle school vocabulary list. this word is a little less commonly used - at least in my own conversations. and that word is " equipoise. " the definition, according to merriam - webster, is " a state of equilibrium. " if i were asked to use it in a sentence, spelling bee - style, i'd say : " the significant progress we have seen toward our objectives of price stability and maximum employment means that the risks to the two sides of our dual mandate have moved into equipoise. " this is because supply and demand imbalances have dissipated, labor market conditions have eased from being exceptionally tight, and inflation has come down significantly. many factors have contributed to this favorable set of circumstances, including the federal reserve's strong actions to restore price stability. the inflation onion is back now let me delve deeper into the two sides of our dual mandate that have moved into equipoise : inflation and the labor market. 1 / 4 bis - central bankers'speeches we'll go in alphabetical order, so let's start with