of inflation from its longer - run goal. ” 5 by replacing the word “ deviations ” with “ shortfalls ” when describing employment and the committee ’ s reaction to changes in employment relative to estimates of its maximum level, the committee indicated that it would not act preemptively to curb inflation based only on the perception of labor market tightness. another notable change to the strategy statement was the adoption of what some refer to as “ asymmetric flexible average inflation targeting ” or “ temporary price level targeting. ” 6 specifically, the new statement noted that “ in order to anchor longer - term inflation expectations at [ its 2 percent goal ], the committee seeks to achieve inflation that averages 2 percent over time, and therefore judges that, following periods when inflation has been running persistently monetary policy, ” a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo. ( via webcast ), august 27, https : / / www. federalreserve. gov / newsevents / speech / powell20200827a. htm ; and richard h. clarida ( 2020 ), “ the federal reserve ’ s new monetary policy framework : a robust evolution, ” speech delivered at the peterson institute for international economics, washington, august, 31, https : / / www. federalreserve. gov / newsevents / speech / clarida20200831a. htm. see the most recent statement on longer - run goals and monetary policy strategy, available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals. pdf ( quoted text in paragraph 5 ). previous versions of the statement had noted that the committee would seek to mitigate “ deviations of inflation from its longer - run goal and deviations [ emphasis added ] of employment from the committee ’ s assessments of its maximum level ” ( paragraph 5 ). for a more detailed look at the changes in the 2020 strategy statement relative to the earlier statement first adopted in 2012, see board of governors of the federal reserve system ( 2021 ), “ review of monetary policy strategy, tools, and communications, ” webpage, https : / / www. federalreserve. gov / monetarypolicy / guide - to - changes - in - statement - on - longer - run - goals - monetarypolicy - strategy.

at around $ 8. 5 trillion — starting in june and at a pace much faster than in the previous episode of balance sheet reduction. 19 the fomc also continued to increase the target range for the federal funds rate over the course of 2022 at a pace much faster than in previous tightening cycles, as it became clear that inflation was higher and more persistent than many forecasters had expected. by july 2023, the fomc had increased the federal funds rate to 5 - 1 / 4 percentage points, and into restrictive territory, where it has remained. and we have continued to reduce the size of our securities holdings. for example, both the august and september 2021 employment reports suggested much lower job growth than did consensus forecasts, and these initial estimates were subsequently sizably increased. similarly, total pce inflation for nearly all quarters in 2021 has been revised higher than initially reported. see the real - time data on the federal reserve bank of st. louis ’ s alfred website at https : / / alfred. stlouisfed. org / series / downloaddata? seid = payems ( job growth ) and https : / / alfred. stlouisfed. org / series / downloaddata? seid = pcectpi ( pce inflation ). see the november 2021 fomc statement, available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm. see the may 2023 fomc statement, available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm. - 11 the monetary policy experience during the pandemic highlights how difficult it can be to assess the current state of the economy and to predict how it will evolve in the presence of major supply - and demand - side shocks, possible structural changes in the economy, and real - time data and measurement uncertainty. an important question i will be thinking about going forward is how to make monetary policy decisions and communications more robust to these types of risks. separate tools for monetary policy and financial stability we know that monetary policy transmission is most effective during periods of stable financial conditions, and that financial stability risks, if realized, can affect the economic outlook. while monetary policy and financial stability are connected, financial stability vulnerabilities and risks are most appropriately addressed using