to the dollar, as other prominent reserve currencies — such as the euro, japanese yen, and british pound — are all issued by close u. s. allies, who also participated in sanctions on russia. more generally, some worry that the dollar ’ s role could be threatened by a move toward so - called geoeconomic fragmentation, in which trade and financial flows realign and become restricted within blocs of allied countries. the formation of a bloc that excludes the u. s. — or even explicitly seeks to counter the united states ’ role in the global economy — could make some countries less likely to denominate international transactions in dollars. this scenario sounds alarming, but thus far, trends that appear consistent with fragmentation largely can be explained by specific policy actions. one example is the dramatic reallocation of u. s. – china trade in recent years, as firms in each country decrease reliance on imports sourced from the other. while this shift has coincided with - 9a period of heightened geopolitical tensions, the evidence suggests a simpler explanation : firms responding to changes in relative prices, in this case caused by the imposition of reciprocal tariffs by the two countries since 2018. for example, while u. s. imports of tariff - affected goods from china have plunged, imports of goods not subject to tariffs have continued to rise. 14 despite the reallocation of trade flows across countries, at the end of the day, those trade flows continue to be invoiced mainly in dollars. a final consideration regarding the international use of the dollar relates to financial stability concerns. in times of global financial stress, investors and governments seek a safe haven to protect the value of their assets and stabilize their own financial markets. when this happens, there is almost always a “ flight to the dollar ” and heightened demand for u. s. dollar assets. we saw this in 2008 and again in 2020. this is the ultimate vindication that the u. s. dollar is the world ’ s reserve currency and is likely to remain so — in times of global stress, the world runs to the dollar, not away from it. to conclude, for the reasons i have laid out here, i do not expect to see the u. s. dollar lose its status as the world ’ s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. recent developments that some have warned could threaten that status have, if anything, strengthened it, at

monthly core pce reading will be 0. 2 percent. if those forecasts hold true, then core pce inflation in december will remain close to 2 percent, when measured on a 3 - month or 6 - month basis. pce inflation of 2 percent is our goal, but that goal cannot be achieved for just a moment in time. it must be sustained at a level of 2 percent. as i said earlier, based on economic activity and the cooling of the labor market, i am becoming more confident that we are within striking distance of achieving a sustainable level of 2 percent pce inflation. i think we are close, but i will need more information in the coming months confirming or ( conceivably ) challenging the notion that inflation is moving down sustainably toward our inflation goal. this brings me to the implications for monetary policy. the progress i have noted on inflation, combined with the data in hand on economic and financial conditions and my outlook has made me more confident than i have been since 2021 that inflation is on a path to 2 percent. while the emphasis of policy since that time has been on pushing down inflation, given the strength of the current labor market the fomc's focus now is likely to be more balanced : keeping inflation on a 2 percent path while also keeping employment near its maximum level. today, i view the risks to our employment and inflation mandates as being more closely balanced. i will be watching for sustained progress on inflation and modest cooling in the labor market that does not harm the economy. i believe policy is set properly. it is restrictive and should continue to put downward pressure on demand to allow us to continue to see moderate inflation readings. so, as i said, i believe we are on the right track to achieve 2 percent inflation. 4 / 6 bis - central bankers'speeches as long as inflation doesn't rebound and stay elevated, i believe the fomc will be able to lower the target range for the federal funds rate this year. this view is consistent with the fomc's economic projections in december, in which the median projection was three 25 - basis - point cuts in 2024. clearly, the timing of cuts and the actual number of cuts in 2024 will depend on the incoming data. risks that would delay or dampen my expectation for cuts this year are that economic activity that seems to have moderated in the fourth quarter of 2023 does not play out ; that the balance of supply and demand in the labor