0. 2 percent and 0. 1 percent over the remaining quarters of the year. core pce inflation jumped to a monthly average of 0. 4 percent in the first quarter of this year but is now estimated to be back to 0. 2 percent last quarter. most importantly, i don't have to look at the second decimal place to see progress! the recent data are making me more confident we will achieve the inflation goal of our dual mandate. monetary policy now let me turn to the implications of this data for monetary policy. as i noted earlier, the changes in the data this year have made it hard to formulate an outlook for policy that would apply to the range of possible paths the economy may take. that range of possibilities must consider two risks. on the one hand, it is essential that monetary policy get inflation down to a sustained level of 2 percent. if we start to loosen policy too soon, and allow inflation to flare up again, we risk losing credibility with the public and allowing expectations of future inflation to become unanchored. that credibility has helped inflation fall as quickly as it has in the past 18 months and squandering it would be a grave mistake. monthly pce inflation has very recently been running near 2 percent at an annual rate, but i need to see a bit more evidence that this will be sustained. the other risk is that we wait too long to ease monetary policy and contribute to a significant economic slowdown or a recession, with unemployment rising notably. 4 / 6 bis - central bankers'speeches with those two risks in mind, let me lay out three scenarios for the economy this year that would result in leading me to different views about appropriate policy. one assumption i make is that there is no significant deterioration in the labor market in the next several months - that we are able to keep the labor market in its current sweet spot. while i believe this is likely, i will be paying close attention to the employment side of our mandate. the first scenario is the optimistic one. here we continue to receive more very favorable cpi inflation reports, with implications for very favorable pce inflation readings as well. this would give us a nice run of inflation data starting in may. i see a significant but not high probability of this scenario occurring. and, in that circumstance, i would have much greater confidence in inflation moving sustainably toward 2 percent. in this scenario, i could envision a rate cut in the not - too - distant future. the second

been more or less steady at the low rate of around 1 percent. to me, this is all evidence of labor supply and demand in balance. back in 2022, i wrote a research note with fed economist andrew figura on the beveridge curve, which is the relationship between unemployment and the job vacancy rate. 2 in that research, we projected that, if layoffs were steady, the unemployment rate would rise to around 4. 5 percent if the job vacancy rate dropped back to its prepandemic level of 4. 6 percent. the latest data estimated the vacancy rate in may as 4. 9 percent, pretty close to the pre - pandemic level. there were some prominent skeptics, but this data tells us that if inflation continues to moderate as it has since may, then we may achieve the soft landing in the labor market that i said back then was possible, with even less of a tradeoff in terms of unemployment. another sign of balance in the labor market is that wage growth has continued to slow. the twelve - month change in average hourly earnings has slowed from its peak of about 6 percent in march 2022, to 4. 3 percent by december 2023, and is down to 3. 9 percent as of june. the three - month increase through june was running at an annual pace of 3. 6 percent, which is close to what i judge is the rate needed to support inflation running at 2 percent in a sustained way. and this interpretation is consistent with other measures that suggest wage growth is back to its pre - pandemic level. so what lies ahead for the labor market? right now, the labor market is in a sweet spotemployment growth is not excessive when accounting for immigration, nominal wage growth is near the rate consistent with price stability, the unemployment rate is close to what is thought of as its long run value, the job vacancy rate is near its pre - pandemic level and the involuntary layoff rate has held steady at 1 percent for over 2 years. in terms of the employment leg of the dual mandate, we may well be able to achieve the soft landing. but we need to keep the labor market in this sweet spot. as my research note highlighted, the history of the beveridge curve indicates that, given the normalization of the labor market, a continued decline in the job vacancy rate and the vacancy - tounemployment ratio may lead to a larger increase in unemployment than we