, household spending accelerated, supported by job gains and by rising home values and equity prices. similarly, growth in business investment started off slowly last year but then picked up during the second half, reflecting improving sales prospects, greater confidence, and still - favorable financing conditions. in contrast, the recovery in the housing sector slowed in the wake of last year's increase in mortgage rates. inflation remained low as the economy picked up strength, with both the headline and core personal consumption expenditures, or pce, price indexes rising only about 1 percent last year, well below the fomc's 2 percent objective for inflation over the longer run. some of the recent softness reflects factors that seem likely to prove transitory, including falling prices for crude oil and declines in non - oil import prices. my colleagues on the fomc and i anticipate that economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer - run sustainable level, and inflation will move back toward 2 percent over coming years. we have been watching closely the recent volatility in global financial bis central bankers ’ speeches markets. our sense is that at this stage these developments do not pose a substantial risk to the u. s. economic outlook. we will, of course, continue to monitor the situation. monetary policy turning to monetary policy, let me emphasize that i expect a great deal of continuity in the fomc's approach to monetary policy. i served on the committee as we formulated our current policy strategy and i strongly support that strategy, which is designed to fulfill the federal reserve's statutory mandate of maximum employment and price stability. prior to the financial crisis, the fomc carried out monetary policy by adjusting its target for the federal funds rate. with that rate near zero since late 2008, we have relied on two lesstraditional tools – asset purchases and forward guidance – to help the economy move toward maximum employment and price stability. both tools put downward pressure on longer - term interest rates and support asset prices. in turn, these more accommodative financial conditions support consumer spending, business investment, and housing construction, adding impetus to the recovery. our current program of asset purchases began in september 2012 amid signs that the recovery was weakening and progress in the labor market had slowed. the committee said that it would continue the program until there was a substantial improvement in the outlook for the labor market in a context of price stability. in

system i will finish with an update on progress on regulatory reforms and supervisory actions to strengthen the financial system. in october, the federal reserve board proposed a rule to strengthen the liquidity positions of large and internationally active financial institutions. 1 together with other federal agencies, the board also issued a final rule implementing the volcker rule, which prohibits banking firms from engaging in short - term proprietary trading of certain financial instruments. 2 on the supervisory front, the next round of annual capital stress tests of the largest 30 bank holding companies is under way, and we expect to report results in march. regulatory and supervisory actions, including those that are leading to substantial increases in capital and liquidity in the banking sector, are making our financial system more resilient. still, important tasks lie ahead. in the near term, we expect to finalize the rules implementing enhanced prudential standards mandated by section 165 of the dodd - frank wall street reform and consumer protection act. we also are working to finalize the proposed rule strengthening the leverage ratio standards for u. s. - based, systemically important global banks. we expect to issue proposals for a risk - based capital surcharge for those banks as well as for a long - term debt requirement to help ensure that these organizations can be resolved. in addition, we are working to advance proposals on margins for noncleared derivatives, consistent with a new global framework, and are evaluating possible measures to address financial stability risks associated with short - term wholesale funding. we will continue to monitor for emerging risks, including watching carefully to see if the regulatory reforms work as intended. since the financial crisis and the depths of the recession, substantial progress has been made in restoring the economy to health and in strengthening the financial system. still, there is more to do. too many americans remain unemployed, inflation remains below our longer - run objective, and the work of making the financial system more robust has not yet been completed. i look forward to working with my colleagues and many others to carry out the important mission you have given the federal reserve. thank you. i would be pleased to take your questions. see board of governors of the federal reserve system ( 2013 ), " federal reserve board proposes rule to strengthen liquidity positions of large financial institutions, " press release, october 24. see board of governors of the federal reserve system, commodity futures trading commission, federal deposit insurance corporation, office of the comptroller of the currency, and securities and exchange commission ( 2013 )