with core inflation over the past 12 months dipping to 1. 6 percent. now, most people don ’ t seem that bothered by inflation that is a touch too low, but at the federal reserve we have set a long - run inflation goal of 2 percent. when inflation runs persistently above or below that goal, we take that very seriously. so far, the recent downward movement appears mostly to reflect normal volatility in inflation statistics. for example, if you look at my preferred measure of underlying inflation, called trimmed - mean inflation — which removes the most volatile price movements — it ’ s been running at 2 percent. this measure of inflation hasn ’ t shown any signs of trending up or down. that said, i will be watching developments closely for signs of a persistent shift away from our 2 percent long - run goal. as i mentioned, the economy started the year with a lot of momentum. but there are reasons to believe that the surge in growth won ’ t persist through the remainder of the year. taking into account of all the indicators we follow, i anticipate a step - down of economic growth, from the 3 percent growth recorded last year to a still - solid pace of about 2 - 1 / 4 percent in 2019. 1 / 2 bis central bankers'speeches this is good news. it ’ s above the economy ’ s underlying potential, but not unsustainably so. healthy economic growth should in turn fuel solid job gains, higher wages for workers, and some further declines in unemployment. the strong economy and labor market should also support inflation returning to 2 percent, the federal reserve ’ s long - run goal. the global picture in addition to the positive data we ’ ve been getting for the u. s., we ’ ve also seen encouraging signs that risks from global economic and financial markets are abating. last year there were worries that the global growth slowdown centered in china and europe would spill over onto our shores. this was one factor contributing to a more downbeat assessment of u. s. growth and the stock market sell - off. since then, we ’ ve seen more positive readings on china ’ s economy, in part due to steps the authorities have taken to reignite growth. and financial markets have definitely rebounded from their winter doldrums. still, we ’ re not entirely out of the woods regarding risks from a global growth slowdown. signs of weakness in japan, south korea, and some regions of europe continue,

advantages and risks hedge funds as a group can convey – once again being aware that this is an extremely heterogeneous group. in my opinion, hedge funds fulfil several useful functions in the financial markets. they contribute to spreading market risk and credit risk to more agents. further, since they can act swiftly and in a flexible manner, they can often help improve the pricing for different products. for example, hedge funds that specialise in identifying mispriced assets contribute to prices that better reflect the underlying risk. when the prices are more correct, resources may also be distributed more efficiently and the risks may be better managed. in new and complex markets hedge funds are often important agents with the opportunity and will to take on risk. this, in turn, improves liquidity in these markets. according to the barclay hedge database. see also the ecb financial stability review 2007 : 2. but there is often little insight but the flexibility hedge funds have also entails risk. problems that arise in a hedge fund can spread to the fund ’ s counterparties ; in the first instance the major banks. what is often highlighted in this context is the hedge funds ’ high leverage. high leverage of course increases the risks, and the effects of a fund failing. hedge funds are often accused of showing herd behaviour, that is, of imitating one another's behaviour and taking similar positions. but i find it difficult to believe that hedge funds to a greater extent than other investors just follow the prevailing trend. the fact that the required rate of return is absolute rather than relative in most hedge funds should actually indicate the opposite. another source of concern is that there is little public insight into hedge funds ’ activities. to take one example, in the united states hedge funds do not need to publicly report their activities or even register them. this means that major risks can arise without either counterparties or authorities being aware of this. two well - publicised cases in this context are the ltcm and amaranth hedge funds. both of the funds collapsed and the lack of insight appears to have contributed to the problems. ltcm was permitted a very high degree of leverage by its counterparties, which is remarkable and reflects the fact that there was no overview of the fund ’ s size and total risk. in the same way, no one observed in time the risks on the energy market that were being built up in the amaranth hedge fund. the funds ’ high leverage and lack of transparency has contributed to a