and strong sales growth will likely continue to boost business investment. moreover, fiscal policy is becoming more stimulative. in this environment, we anticipate that inflation on a 12 - month basis will move up this year and stabilize around the fomc ’ s 2 percent objective over the medium term. wages should increase at a faster pace as well. the committee views the near - term risks to the economic outlook as roughly balanced but will continue to monitor inflation developments closely. monetary policy i will now turn to monetary policy. the congress has assigned us the goals of promoting maximum employment and stable prices. over the second half of 2017, the fomc continued to gradually reduce monetary policy accommodation. specifically, we raised the target range for the federal funds rate by 1 / 4 percentage point at our december meeting, bringing the target to a range of 1 - 1 / 4 to 1 - 1 / 2 percent. in addition, in october we initiated a balance sheet normalization program to gradually reduce the federal reserve ’ s securities holdings. that program has been proceeding smoothly. these interest rate and balance sheet actions reflect the committee ’ s view that gradually reducing monetary policy accommodation will sustain a strong labor market while fostering a return of inflation to 2 percent. in gauging the appropriate path for monetary policy over the next few years, the fomc will continue to strike a balance between avoiding an overheated economy and bringing pce price inflation to 2 percent on a sustained basis. while many factors shape the economic outlook, some of the headwinds the u. s. economy faced in previous years have turned into tailwinds : in particular, fiscal policy has become more stimulative and foreign demand for u. s. exports is on a firmer trajectory. despite the recent volatility, financial conditions remain accommodative. at the same time, inflation remains below our 2 percent longer - run objective. in the fomc ’ s view, further gradual increases in the federal funds rate will best promote attainment of both of our objectives. as always, the path of monetary policy will depend on the economic outlook as informed by incoming data. in evaluating the stance of monetary policy, the fomc routinely consults monetary policy rules that connect prescriptions for the policy rate with variables associated with our mandated objectives. personally, i find these rule prescriptions helpful. careful judgments are required about the measurement of the variables used, as well as about the implications of the

to be restrictive for some time to have confidence that inflation is moving back to target. for these reasons, we are committed to avoiding pulling back prematurely. we also recognize that risks may become more two sided at some point. uncertainty is currently high, and there are a range of estimates around the appropriate destination of the target range for the cycle. proceeding deliberately and in a data - dependent manner will enable us to learn how economic activity and inflation are adjusting to the cumulative tightening and to update our assessments of the level of the policy rate that will need to be maintained for some time to bring inflation back to 2 percent. 1 i want to thank kurt lewis and shaghil ahmed of the federal reserve board for their assistance on these remarks. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. 2 the central banks of the united states, the united kingdom, canada, the euro area, australia, new zealand, norway, sweden, and switzerland together account for 49 percent of nominal global gdp measured in dollars at market exchange rates. each of these central banks has raised its policy rate by at least 125 basis points in the past six months. 3 see lael brainard ( 2015 ), " unconventional monetary policy and cross - border spillovers, " speech delivered at " unconventional monetary and exchange rate policies, " 16th international monetary fund jacques polak research conference, washington, november 6 ; and lael brainard ( 2017 ), " cross - border spillovers of balance sheet normalization, " speech delivered at the national bureau of economic research's monetary economics summer institute, cambridge, mass., july 13. 4 a paper based on data between 2005 and 2017 found that about half of the reaction in german domestic yields spills over to u. s. yields following ecb announcements, which was nearly identical to the spillover from u. s. yields to german bund yields measured following federal open market committee announcements. see stephanie e. curcuru, michiel de pooter, and george eckerd ( 2018 ), " measuring monetary policy spillovers between u. s. and german bond yields, " international finance discussion papers 1226 ( washington : board of governors of the federal reserve system, april ). 5 the federal reserve's broad trade - weighted dollar index is based on 26 currencies of major u. s. trading partners. it is published in statistical release h. 10, " foreign exchange rates