##omc ’ s target. just as current readings of inflation give some pause, broad wage trends seem to suggest we are not yet on the cusp of full employment. the quite modest growth of wages across the economy does not seem normal given the solid growth numbers we ’ ve seen in recent quarters. inflation and wages ought to be telling indicators that the gaps are closing. their weakness is a concern. a noisy first half the first half of 2015 will present challenges in evaluating the validity of economic assumptions. i ’ ve mentioned oil prices. after seven months of decline, prices firmed in trading sessions last week, then fell again. financial market participants interpreted the firming as a positive bis central bankers ’ speeches development. a number of oil and gas sector analysts forecast that global petroleum supplies will exceed demand through the first half of the year. the dollar has appreciated by 13 percent on a trade - weighted basis since last june. exports in the fourth quarter seem to have been negatively affected by the dollar ’ s rise. i will avoid predicting exchange rates, but suffice to say that the impact of the dollar on exports, as well as imported consumer goods prices, is part of the current swirl of variables making the state of the economy harder to assess. the direction of the dollar is an aspect of the larger context of slow global growth with risk of spillover to the u. s. economy. some of the influence of soft economic conditions abroad is incorporated into my baseline outlook. in contrast, more extreme scenarios are not. i should also comment on inflation compensation in inflation - protected securities. compensation for inflation in these securities ( so - called tips ) has moved sharply lower since last summer. this decline may reflect transitory influences like falling energy costs. a less benign possibility is that investors are lowering their outlook for inflation. this could be either because their confidence is waning that the fed will achieve its 2 percent inflation target, or because they see growing risks to the continued strength of the broad economy. since mid - january, some inflation - compensation measures have shown signs of reversing. a firming in the inflation compensation data from their year - end lows is an example of the kind of encouraging development that will bolster my confidence in the medium - term outlook. to put an exclamation point on the proviso that the first half of 2015 may be noisy and hard to read, i ’ ll just catalog a few of the obvious things that might confuse true underlying conditions : oil

– maximum employment and low and stable inflation. in my view, the biggest factor influencing the actual timing of a liftoff decision should be the committee ’ s confidence that these objectives will be achieved in an acceptable timeframe and, especially, that inflation will move at deliberate speed toward the target of 2 percent per annum. inflation readings and forecasts may be pivotal in deciding when to begin adjusting policy. as already explained, we are, at present, experiencing inflationary trends well below target, and our readings are complicated by more - than - normal noise associated with the drop in oil and gasoline prices, falling import prices, and softening of some measures of inflation expectations. it ’ s quite possible there will be considerable ambiguity in the picture presented by data in the first half of the year. beyond the noise in inflation numbers, it ’ s obvious there is simply a lot bis central bankers ’ speeches moving around at this time – oil prices, the dollar, even quarterly growth numbers, in all likelihood. noisy, jumpy data affect my confidence in the outlook. i ’ m likely to decide what policy decision to support based on where i think things are headed. when the numbers come in noisy, it ’ s just harder. if the early months of this year bring mixed news on the economy, the risk manager in me will lean to preferring a later date for the first policy move to an earlier one. that said, after six years of recovery and considering all that that has both transpired and been accomplished, i don ’ t think we policymakers should get too rigid about liftoff a little earlier or later. my preferred timing may not be the committee ’ s consensus decision. just as i think it ’ s appropriate to downplay the exact timing of liftoff, i think it ’ s important to understand that a decision to raise rates will not constitute the throwing of a switch from easy money conditions to tight. the rate environment will remain stimulative, even as the policy rate gradually rises, as i expect. the pace of rate increases will not be preordained. the path of policy will depend on the ongoing performance of the economy. at the recent meeting of the fomc in december, the committee made an adjustment of its forward guidance by introducing the theme of patience in beginning to normalize the stance of policy. i supported and expect to continue to support a patient approach, one that is relatively cautious and conservative as regards the pace of normalization of rates. conclusion now let