an acceleration in job gains to a very strong pace of around 350, 000 for both december and january. the unemployment rate remained low at 3. 7 percent. this appears to reverse the trend from last year, when the average pace of job gains slowed and the labor force participation rate rose through november, a sign that labor market demand and supply may have been coming into better balance. that said, today's jobs report with markedly stronger job growth and a labor force participation that has retraced some of its earlier gains suggests that progress has stalled over the past two months. considering these developments, i voted to maintain the policy rate at its current level while we continue to monitor the incoming data and assess the implications for the inflation and economic outlook. my baseline outlook is that inflation will decline further 1 / 7 bis - central bankers'speeches with the policy rate held at the current level. should the incoming data continue to indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive. in my view, we are not yet at that point. and a number of important upside inflation risks remain. these include risks from geopolitical conditions, including the prominent risk of spillovers from geopolitical conflicts and the extent to which food and energy markets and supply chains remain exposed to these influences. there is also the risk that continued easing in financial conditions could add momentum to demand, stalling any further progress in lowering inflation, or even causing inflation to reaccelerate. finally, there is a risk that continued labor market tightness could lead to persistently high core services inflation. today's labor market data, which indicated a pickup in wage inflation in recent months, suggests ongoing elevated wage growth as some businesses continue to report above - average wage increases to compensate for inflation. given these risks, and the general uncertainty regarding the economic outlook, i will continue to watch the data closely - especially the inflation data revisions next week and upcoming inflation reports - as i assess the appropriate path of monetary policy. the frequency and extent of data revisions over the past few years, as illustrated in today's employment report, make the task of predicting how the economy will evolve even more challenging, and i will remain cautious in my approach to considering future changes in the stance of policy. reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run. it is

relying on the belief that long - term interest rates would remain low in perpetuity. regulators themselves - while increasingly aware of and focused on these risks over time - were late to the game in terms of taking strong, proactive action, both in the leadup to the 2008 financial crisis, and more recently, in the lead - up to the banking stress in the spring of 2023. in each of these cases, false assumptions led to complacency, which resulted in an inability to appropriately recognize and appreciate the early signs of risk that ultimately stressed the banking system and the broader economy. but how do we protect the banking system against the risks that come from complacency? for bankers, i think this requires a constant focus on risks, both traditional and emerging. to be clear, many bankers live with this mindset every day ; they know their borrowers and communities, and they carefully monitor traditional and emerging risks - and manage those risks - on an ongoing basis. in many ways, complacency can result in overlooking risks even on matters that are universal in the management of all banks, like succession planning and information technology management. we know that many banks, particularly those in rural markets, face significant challenges when planning effective leadership succession. absent appropriate succession planning, often the only options for a bank can be a sale to a competitor or ceasing operations, both of which can harm the bank's local community. even the management of information technology can pose significant risks if a bank fails to devote sufficient resources to maintaining and updating systems, or if a bank fails to appropriately integrate and update legacy systems, such as after a bank acquisition or merger. 2 for regulators, the cure for complacency is consistent attention even to dormant risks, and an appropriately robust response when issues are identified. complacency is not always the product of inattention but can also arise because of mis - prioritization, such as when regulators focus on risks that are tangential to statutory mandates and critical areas of responsibility. this kind of misprioritization can increase the risk that regulators overlook areas that require more immediate attention. sometimes, familiar risks emerge in new ways. having a concentrated, monoline business model and experiencing rapid growth are both well - known risks to ongoing viability, even though the particulars may vary over time. during the banking stress in 2023, several banks that experienced particularly acute stress had concentrated 3 / 7 bis - central bankers '