downside risks materialize, foreign activity and demand for u. s. exports could weaken and financial market conditions could tighten further. of course, economic growth could also exceed our projections for a number of reasons, including the possibility that low oil prices will boost u. s. economic growth more than we expect. at present, the committee is closely monitoring global economic and financial developments, as well as assessing their implications for the labor market and inflation and the balance of risks to the outlook. as i noted earlier, inflation continues to run below the committee ’ s 2 percent objective. overall consumer prices, as measured by the price index for personal consumption expenditures, increased just 1 / 2 percent over the 12 months of 2015. to a large extent, the low average pace of inflation last year can be traced to the earlier steep declines in oil prices and in the prices of other imported goods. and, given the recent further declines in the prices of oil and other commodities, as well as the further appreciation of the dollar, the committee expects inflation to remain low in the near term. however, once oil and import prices stop falling, the downward pressure on domestic inflation from those sources should wane, and as the labor market strengthens further, inflation is expected to rise gradually to 2 percent over the medium term. in light of the current shortfall of inflation from 2 percent, the committee is carefully monitoring actual and expected progress toward its inflation goal. of course, inflation expectations play an important role in the inflation process, and the committee ’ s confidence in the inflation outlook depends importantly on the degree to which longer - run inflation expectations remain well anchored. it is worth noting, in this regard, that market - based measures of inflation compensation have moved down to historically low levels ; our analysis suggests that changes in risk and liquidity premiums over the past year and a half contributed significantly to these declines. some survey measures of longer - run inflation expectations are also at the low end of their recent ranges ; overall, however, they have been reasonably stable. monetary policy turning to monetary policy, the fomc conducts policy to promote maximum employment and price stability, as required by our statutory mandate from the congress. last march, the committee stated that it would be appropriate to raise the target range for the federal funds rate when it had seen further improvement in the labor market and was reasonably confident that inflation would move back to its 2 percent objective over the medium term. in december, the committee judged that these two criteria had been

less inclined at most income levels to invest in stocks, and black families are less likely to be owners of small business. although it is difficult to draw precise inferences regarding the key factors that have limited minority wealth accumulation, one endeavor should pay off in terms of greater saving by and higher net worth of minority households : increased efforts in financial education. we at the federal reserve have embarked on a program to raise the level of financial literacy in our country, and i believe that similar programs offered by private financial institutions will also yield a high return. thus, i encourage all of you to work to increase the knowledge of your depositors about financial issues. conclusion let me briefly conclude by restating my main points. probably nothing is more critical to the long - run well - being of the u. s. economy than ensuring high rates of productivity growth. productivity growth requires adequate levels of investment. while foreign saving is currently a feasible source of investable resources, it would be more economically advantageous in the longer run if we could raise the amount of household and government savings and close the gap between domestic investment and national savings. within the household sector, the accumulated saving of minority households, relative to their income, appears to be lower than that of nonminority households. in this regard, increased efforts at financial literacy programs can have a positive payoff, especially since at least one source of the minority - nonminority differential is apparently due to lower rates of return earned by minority households.