interest rate decision suggest that the labor market has continued to improve. although job gains slowed some last month, over the most recent three months payrolls have increased 230, 000 jobs per month on average, as the unemployment rate declined. moreover, the spending indicators that we have in hand for january point to a pickup in economic growth this quarter. further, the 12 - month change in average hourly earnings has moved up in recent months and stood at 2 - 1 / 2 percent in january. in addition, the rate of core consumer price index inflation over the past 12 months exceeded 2 percent, though this was not true of the core price index of personal consumption expenditures that the fed monitors closely. however – and there is frequently a “ however ” in our business – further declines in oil prices suggest that total inflation will likely remain low for somewhat longer than had been previously expected before moving back to 2 percent. in addition, global financial markets have been unusually volatile since the turn of the year. for instance, the s & p 500 volatility index ( vix ) rose markedly in early january, though it remains below the levels it reached in august of last year and in 2011, and it last week declined below its average value since the start of the year. the large movements in asset prices likely reflect increased concern about the global outlook, particularly ongoing developments in china and the effects of the declines in the prices of oil and other commodities on commodity - exporting nations. asset price declines may also reflect a reassessment of the prospects for growth in europe and japan, and perhaps also a recognition that u. s. gross domestic product and productivity growth have remained stubbornly low. if the recent financial market developments lead to a sustained tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the united states. but we have seen similar periods of volatility in recent years – including in the second half of 2011 – that have left little visible imprint on the economy, and it is still early to judge the ramifications of the increased market volatility of the first seven weeks of 2016. as chair yellen said in her testimony to the congress two weeks ago, while “ global financial developments could produce a slowing in the economy, i think we want to be careful not to jump to a premature conclusion about what is in store for the u. s. economy. ” of course, the fomc is closely monitoring global economic and financial developments and

##ory effects of declines in crude oil prices and also in the prices of non - oil imports. prices for these goods have fallen further and as you all know, for longer than expected. once these oil and import prices stop falling and level out, their effects on inflation will dissipate, which is the main reason we expect that inflation will rise to 2 percent over the medium term, supported by a further strengthening in labor market conditions. of course, with the federal funds target now at between 25 and 50 basis points, and the effective federal funds rate currently almost at the center of that target range, our monetary policy remains accommodative. and, at the time of our january decision, my colleagues and i anticipated that economic conditions would evolve in a manner warranting only gradual increases in the federal funds rate, and that the federal funds rate would likely remain, for some time, below the levels that we expect to prevail in the longer run. i should emphasize, however, that that was an expectation, not a decision, and our future policy actions are by no means predetermined. see board of governors of the federal reserve ( 2015 ), “ federal reserve issues fomc statement, ” press release, december 16, www. federalreserve. gov / newsevents / press / monetary / 20151216a. htm. bis central bankers ’ speeches during the years in which we held the federal funds rate near zero, the federal reserve also engaged in large - scale asset purchases to further ease financial conditions and promote economic recovery. consequently, the federal reserve ’ s balance sheet grew from less than $ 1 trillion in mid - 2008 to $ 4. 5 trillion by late 2014. as a result of the size of our balance sheet, the fomc is employing new tools to implement monetary policy. in particular, to raise the federal funds rate we increased the interest rate we pay on reserve balances that depository institutions hold at the federal reserve. we also employed an overnight reverse repurchase facility, through which we interact with a broad range of firms to help provide a soft floor for the federal funds rate consistent with our target range. 2 these new tools have worked well, and the federal funds rate and other short - term interest rates have increased as expected. we will continue to monitor these markets closely, and we can make adjustments to our tools if necessary to maintain control over money market rates. the economic data that have come in since our december