balance to global supply and demand, alleviate supply - chain issues, and reduce inflationary pressures. there are other factors in our favor. first, the fed's commitment to achieve and sustain 2 percent inflation is a now bedrock principle. this was not always the case. it's only been 10 years since the fomc defined 2 percent inflation as its longer - run goal. 7 this transparency about our objectives provides a " north star " for policy decisions and communications. it likewise improves the public's understanding of our goals and actions. it has also served us well in keeping longer - term inflation expectations well anchored. for example, the most recent survey of consumer expectations shows that consumers expect inflation to decline over the next three years. 8 and market - based measures of inflation expectations have also remained well anchored. this anchoring of longer - term expectations is critical to keeping high inflation from becoming embedded in the psychology of consumers and businesses, which we know from the past is costly to undo. economic outlook so, what does tighter monetary policy mean for the economy? we are already seeing some of the effects. broad measures of financial conditions, including borrowing and 3 / 5 bis - central bankers'speeches mortgage rates and equity prices, have become significantly less supportive of spending. this has led to a decline in activity in the housing market and signs of slowing in consumer and business investment spending. as this continues, i expect real gdp to be close to flat this year and to grow modestly in 2023. as a result of slowing growth, i anticipate the unemployment rate will rise from its current level of 3. 7 percent to around 4 - 1 / 2 percent by the end of 2023. and with regard to inflation, i expect the combination of cooling global demand and steady improvements in supply to result in falling rates of inflation for goods that rely heavily on commodities, as well as for those that have been most affected by supplychain bottlenecks. these factors should contribute to inflation declining to about 3 percent next year. bringing down underlying inflation - the inner layer of the inflation onion - will take longer, but with monetary policy helping to restore balance between demand and supply, i see inflation moving close to our 2 percent goal in the next few years. conclusion tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done. it will take time, but i am fully confident we will return to a sustained period of price stability. 1 board of

, such as lumber, are in retreat. absent further supply disruptions, i expect slowing global growth, in part reflecting tighter monetary policy here and abroad, will continue to reduce demand for these products. this should put downward pressure on commodity prices and help ease inflationary pressures, especially for goods and services that are heavily reliant on commodity inputs. second, we have seen significant improvement in global supply chains, and i expect this to continue. at the new york fed, economists have developed the global supply chain pressure index, which measures the extent of global supply - chain disruptions by summarizing a variety of data, including reported delivery lags and the costs of transporting goods. the index soared to unprecedented levels late last year but has 2 / 5 bis - central bankers'speeches now reversed about two thirds of its rise. although significant supply - chain problems are still affecting some industries, such as autos, improvements in supply should help ease supply - demand imbalances and result in lower prices for affected products. 3 unfortunately, that's it for the good news on inflation. the fact is, lower commodity prices and receding supply - chain issues will not be enough by themselves to bring inflation back to our 2 percent objective. the demand for durable goods remains very high - beyond what can be produced and brought to market, even with improved supply chains. and the demand for labor and services is far outstripping available supply. this is resulting in broad - based inflation, which will take longer to bring down. taking strong actions to help rein in demand to levels consistent with supply - and therefore bring inflation down - monetary policy needs to do its job. the fomc is taking strong actions toward that end. at its most recent meeting, in september, the fomc raised the target range of the federal funds rate to 3 to 3 - 1 / 4 percent, its fifth consecutive increase. 4 and the committee said it anticipates that ongoing increases will be appropriate. according to the median view from the fomc's summary of economic projections, the projected appropriate level of the federal funds rate at the end of next year is 4. 6 percent. 5 in addition, the fomc continues to reduce its holdings of treasury securities and agency debt and agency mortgage - backed securities. 6 importantly, the fed is not alone. many other central banks are also taking steps to reduce inflation. since many sources of inflation are global, these actions should speed the process of restoring