for release on delivery 8 : 00 a. m. est ( 2 : 00 p. m. local time ) january 8, 2025 challenges facing central bankers remarks by christopher j. waller member board of governors of the federal reserve system at lectures of the governor organization for economic cooperation and development paris, france january 8, 2025 thank you, alvaro, and thank you for the honor of initiating this new series of lectures from central bankers. 1 i will begin with a few words on the u. s. economic outlook and the implications for monetary policy. but on this occasion, i thought it appropriate to then widen my perspective, to address what i see as the leading challenges that oecd economies face that are of particular importance to central bankers in how we approach monetary policy and our other responsibilities. i continue to believe that the u. s. economy is on a solid footing. real gross domestic product ( gdp ) growth has been above 2 percent for eight of the last nine quarters and is expected to grow above 2 percent in the fourth quarter of 2024. despite this robust economic growth, the labor market softened over 2024, and employment is now near what i judge to be the federal open market committee ’ s ( fomc ) maximumemployment objective. i have seen nothing in the data or forecasts that suggests the labor market will dramatically weaken over coming months. with regard to inflation, after a period of rapid disinflation in 2022 and 2023, progress appears to have stalled in the final months of 2024. our latest reading of core personal consumption expenditures ( pce ) inflation is 2. 8 percent for the 12 months ending in november. this is down just a bit from where it was a year earlier, at 3. 2 percent. this minimal further progress has led to calls to slow or stop reducing the policy rate. however, i believe that inflation will continue to make progress toward our 2 percent goal over the medium term and that further reductions will be appropriate. let me explain why i expect inflation to continue toward our goal. first, as we saw a year ago when inflation briefly increased, progress has been uneven, but the views expressed here are my own and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. - 2disinflation is more apparent if one smooths through the recent upticks. to tease out the underlying trend in inflation, i often look at the six - month percent

##di - garcia and others ( 2024 ) document that both the core and noncore components of headline inflation measures co - moved strongly across countries during the pandemic and inflation episode ; see danilo cascaldi - garcia, luca guerrieri, matteo iacoviello, and michele modugno ( 2024 ), “ lessons from the co - movement of inflation around the world, ” feds notes ( washington : board of governors of the federal reserve system, june 28 ), https : / / doi. org / 10. 17016 / 2380 - 7172. 3543. for an early account of the role of supply chain disruptions in fueling the global rise in producer and consumer prices, see ozge akinci, gianluca benigno, ruth cesar heymann, julian di giovanni, jan j. j. groen, lawrence lin, and adam i. noble ( 2022 ), “ the global supply side of inflationary pressures, ” federal reserve bank of new york, liberty street economics ( blog ), january 28, https : / / libertystreeteconomics. newyorkfed. org / 2022 / 1 / the - global - supply - side - of - inflationary - pressures. on the transmission of supply disruptions to global value chains, see francois de soyres, alexandre gaillard, ana maria santacreu, and dylan moore ( 2024 ), “ supply disruptions and fiscal stimulus : transmission through global value chains, ” aea papers and proceedings, vol. 114 ( may ), pp. 112 – 17. - 5during the pandemic contributed to inflation is the subject of ongoing debate. 5 regardless of their effects on inflation, fiscal policy actions across oecd countries led to a doubling and tripling of budget deficits as a percentage of gdp with even larger percentages in some places. those deficits have steadily fallen since then but are still higher in many countries than before the pandemic, and debt levels have grown for many oecd members. another recent challenge for oecd economies is the widespread weakness in manufacturing. manufacturing boomed in many places with the onset of the pandemic, when consumers switched their spending from in - person services to goods. but as businesses and economies reopened with the easing of pandemic - related restrictions, the swing to service spending by consumers began what has been a sustained slide in manufacturing in oecd economies