, meaning inflation should fall back to our inflation target in coming periods. but that will mislead you in terms of understanding the true inflation rate, because you are putting zero probability that a large spike in inflation will happen to another good in the future. the moral of this little example is that one needs to be careful when selectively ignoring data series — be it used car prices, food and energy prices, or household surveys of inflation expectations. all of these series convey important information about the evolution of inflation, and one should exhibit caution in dismissing data as outliers. we must keep our eyes open to inflationary pressures, wherever they come from, with consistency and rigor and stand ready to adjust policy if we conclude that such a change is warranted. this brings me to how i believe monetary policy should evolve in the coming months, based on the outlook i have described. the near - term decision we face is when to begin slowing the pace of asset purchases, which have each month been adding to the level of financial accommodation provided by the fed to support the economy. our test for this step was making “ substantial further progress ” toward our employment and inflation goals. after years of running below 2 percent, the recent and sustained increase in inflation clearly represents substantial progress toward our goal. and the continued gains in employment, despite a couple of months of a slowdown, along with results across a range of labor market indicators, indicate to me that there has also been substantial further progress toward maximum employment. i support the fomc beginning to reduce asset purchases following our meeting in november. importantly, this action should not tighten financial conditions, since a later 2021 tapering has already been priced in by most participants. one issue on which we should also be clear is the pace of tapering. i have said in the past that i favor a pace of tapering that would result in the end of asset purchases by the middle of 2022. of course, if economic conditions and the outlook were to deteriorate significantly, we could slow or pause this tapering. and if the economy were to strengthen more than expected, the plan to rapidly end purchases would provide policy space in 2022 to act sooner than now anticipated to begin raising the target range for the federal funds rate. based on my outlook for the economy, however, i do not expect liftoff to occur soon after tapering is completed. the two policy actions are distinct. i believe the pace of continued improvement in the labor market will

be gradual, and i expect inflation will moderate, which means liftoff is still some time off. that said, as i mentioned earlier, if my upside risk for inflation comes to pass, with inflation considerably above 2 percent well into 2022, then i will favor liftoff sooner than i now anticipate. a major consideration will be my judgment about whether inflation expectations are at risk of becoming “ unanchored " — rising substantially and persistently above 2 percent. my fomc colleagues and i will be watching all of the data carefully in the coming weeks and months and will adjust policy as needed to help ensure the u. s. economy continues to recover from the effects of covid, and that we continue to make progress toward our economic goals. 1 these views are my own and do not represent any position of the board of governors or other federal reserve policymakers. return to text 2 the atlanta fed's spider chart and the kansas city fed's measure of labor market conditions can be found on 5 / 6 bis central bankers'speeches the reserve banks'respective websites at www. atlantafed. org / chcs / labor - marketdistributions and www. kansascityfed. org / data - and - trends / labor - market - conditions - indicators. return to text the minutes of the september 2021 fomc meeting are available on the board's website at www. federalreserve. gov / monetarypolicy / fomccalendars. htm. return to text 6 / 6 bis central bankers'speeches