conclusion in summary, the u. s. economy is continuing to grow at a moderate pace. i expect annual growth of around 3 percent in 2012 and 2013. prospects for labor markets will continue to improve, with job growth strengthening and the unemployment rate falling gradually over time. i believe inflation expectations will be relatively stable and inflation will moderate in the near term. however, with the very accommodative stance of monetary policy, we must guard against the medium - and longerterm risks of inflation and the potential for distortions such accommodation can create. finally, i believe we must also guard against an accelerationist approach to policy – one that calls for monetary policy to do more and more in an attempt to get to our objectives that much faster. the risks to economic stability of such an approach over the medium term could be quite high and could jeopardize our ability to achieve our longer - terms goals. bis central bankers ’ speeches

wealth for consumers and the economy as a whole. the losses are real and the consequences severe for many individuals and many businesses. moreover, monetary policy cannot paper over these losses, nor should it try to do so. households and businesses, nevertheless, continue to make progress on restoring the health of their balance sheets by paying down debt and increasing savings. most economists, including me, believe that this process will continue into 2012. the labor market has grown stronger in recent months. although there are still too many people unemployed in our region and the nation, i am encouraged by the most recent employment reports. the january employment report showed a net gain of 243, 000 jobs, and revisions to november and december added another 60, 000 jobs to the recovery. some i should note the usual disclaimer that my views are my own and not necessarily those of the federal reserve board or my colleagues on the federal open market committee. bis central bankers ’ speeches have downplayed the report, suggesting that one good data point does not make a trend, and i wholeheartedly agree. but what we have seen is more than one data point. net employment gains were 103, 000 in october, 157, 000 in november, 203, 000 in december, and 243, 000 in january – a clear positive trend. the household survey also reported a significant decline in the unemployment rate. here, too, the trend is encouraging – 8. 9 percent in october, 8. 7 in november, 8. 5 in december, and 8. 3 in january. that is the lowest level in nearly three years. as growth continues and strengthens, i expect further gradual declines in the unemployment rate, with the rate falling to 8 percent or less, by the end of 2012. in our district, all three states ended 2011 with lower unemployment rates. new jersey ’ s rate, at about 9 percent, is still higher than the national average, but delaware ’ s and pennsylvania ’ s were below the national average, with rates of 7. 4 and 7. 6 percent, respectively. as we continue down the road to recovery, i expect we will face further hiccups along the way. one significant risk is the potential effects of the continuing sovereign debt crisis in europe. the economic slowdown in the euro zone will likely restrain u. s. exports. and while strains in financial markets have been limited to european institutions so far, we must continue to monitor events to ensure that there are no adverse spillovers to u.