percent, inflation has recently moved close to that level. our challenge will be to keep it there. many factors affect inflation — some temporary and others longer lasting. inflation will at times be above 2 percent and at other times below. we say that the 2 percent objective is “ symmetric ” because the fomc would be concerned if inflation were running persistently above or below our objective. 2 / 3 bis central bankers'speeches the unemployment rate is low and expected to fall further. americans who want jobs have a good chance of finding them. moreover, wages are growing a little faster than they did a few years ago. that said, they still are not rising as fast as in the years before the crisis. one explanation could be that productivity growth has been low in recent years. on a brighter note, moderate wage growth also tells us that the job market is not causing high inflation. with a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the fomc believes that — for now — the best way forward is to keep gradually raising the federal funds rate. we are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses. on the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective. the committee will continue to weigh a wide range of relevant information when deciding what monetary policy will be appropriate. as always, our actions will depend on the economic outlook, which may change as we receive new data. for guideposts on appropriate policy, the fomc routinely looks at monetary policy rules that recommend a level for the federal funds rate based on the current rates of inflation and unemployment. the july monetary policy report gives an update on monetary policy rules and their role in our policy discussions. i continue to find these rules helpful, although using them requires careful judgment. thank you. i will now be happy to take your questions. 3 / 3 bis central bankers'speeches

keep a close eye on inflation with the goal of keeping it near 2 percent. looking ahead, my colleagues on the fomc and i expect that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years. this judgment reflects several factors. first, interest rates, and financial conditions more broadly, remain favorable to growth. second, our financial system is much stronger than before the crisis and is in a good position to meet the credit needs of households and businesses. third, federal tax and spending policies likely will continue to support the expansion. and, fourth, the outlook for economic growth abroad remains solid despite greater uncertainties in several parts of the world. what i have just described is what we see as the most likely path for the economy. of course, the economic outcomes we experience often turn out to be a good deal stronger or weaker than our best forecast. for example, it is difficult to predict the ultimate outcome of current discussions over trade policy as well as the size and timing of the economic effects of the recent changes in fiscal policy. overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate. monetary policy over the first half of 2018 the fomc has continued to gradually reduce monetary policy accommodation. in other words, we have continued to dial back the extra boost that was needed to help the economy recover from the financial crisis and recession. specifically, we raised the target range for the federal funds rate by 1 / 4 percentage point at both our march and june meetings, bringing the target to its current range of 1 - 3 / 4 to 2 percent. in addition, last october we started gradually reducing the federal reserve ’ s holdings of treasury and mortgage - backed securities. that process has been running smoothly. our policies reflect the strong performance of the economy and are intended to help make sure that this trend continues. the payment of interest on balances held by banks in their accounts at the federal reserve has played a key role in carrying out these policies, as the current monetary policy report explains. payment of interest on these balances is our principal tool for keeping the federal funds rate in the fomc ’ s target range. this tool has made it possible for us to gradually return interest rates to a more normal level without disrupting financial markets and the economy. as i mentioned, after many years of running below our longer - run objective of 2