supply shocks to food, energy, labor, or semiconductors, we have both the capacity and the responsibility to maintain anchored inflation expectations and price stability. see ricardo reis ( 2022 ), “ the burst of high inflation in 2021 – 22 : how and why did we get here? ” working paper. - 8we are in this for as long as it takes to get inflation down. so far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further. as of this month, the maximum monthly reduction in the balance sheet will be nearly double the level of the previous cycle. 10 together, the increase in the policy rate and the reduction in the balance sheet should help bring demand into alignment with supply. monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target. the economic environment is highly uncertain, and the path of policy will be data dependent. while the precise course of action will depend on the evolution of the outlook, i am confident we will achieve a return to 2 percent inflation. our resolve is firm, our goals are clear, and our tools are up to the task. as of september 2022, the monthly caps on the runoff of treasury securities and mortgage - backed securities are $ 60 billion and $ 35 billion per month, as compared with $ 30 billion and $ 20 billion, respectively, from 2017 to 2019.

reconcile with the more downbeat tone of activity. year - to - date through august, payroll employment has increased by about 3½ million jobs, a surprisingly strong increase given the decelerating spending and declining gdp over the first half of the year. the unemployment rate has fallen, on net, from 4 percent in january to 3. 7 percent in august. possibly the strongest indications that the labor market is tight were the first - and secondquarter readings of the employment cost index ( eci ), which point to strong and broadbased growth in total hourly compensation. the 6. 3 percent reading for the eci in the second quarter was the largest annualized quarterly growth in compensation under this metric since 1982. the most recent reading of average hourly earnings suggested some possible cooling, decelerating from a gain of 0. 5 percent in july to 0. 3 percent in august, although it will be important to see additional data. the deceleration in economic activity thus far this year has coincided with only a slight easing in job openings, on net, since their peak in march. the current high level of - 6job openings relative to job seekers remains close to the largest in postwar history, consistent with a tight labor market ( figure 5 ). businesses that experienced unprecedented challenges restoring or expanding their workforces following the pandemic may be more inclined to make greater efforts to retain their employees than they normally would when facing a slowdown in economic activity. this may mean that slowing aggregate demand will lead to a smaller increase in unemployment than we have seen in previous recessions, but it is too early to draw any definitive conclusions, and i will be monitoring a variety of labor market indicators closely. 8 as we follow through on our plan to move monetary policy to an appropriately restrictive stance, the effect of the increased policy rate and pace of balance sheet shrinkage should put downward pressure on aggregate demand, particularly in interestsensitive sectors like housing. continued improvements in supply conditions and a further rotation of consumption away from goods and into services should also help by reducing price pressures in goods. with regard to non - housing services, the magnitude of price pressure over the next several quarters will depend on an overall slowing in spending as well as the extent to which labor supply improves in these sectors. since pivoting last year, our actions and communications have tightened financial conditions significantly and at a much more rapid speed than earlier cycles. so far during 2022, real 2 - year yields have risen more than