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ranges and have not risen sustainably. 4 meanwhile, market based measures of inflation compensation have declined noticeably over the past two years at longer - term horizons, and have shown little improvement despite the recent stabilization in the price of oil and the exchange rate. thus, we cannot rule out that the sustained period of undershooting the inflation target along with global disinflationary pressures are weighing on inflation expectations. recognition of these developments is reflected in the evolution of the forecasts of federal open market committee ( fomc ) participants in the summary of economic projections ( sep ) from june 2012 to june 2016. the sep forecasts have shown repeated mark downs of the central tendency of the projection for core pce ( personal consumption expenditures ) inflation, and the attainment of 2 percent at the upper end of the range has been pushed out repeatedly from 2012 initially to 2017 most recently. the apparent flatness of the phillips curve together with evidence that inflation expectations may 1 / 8 bis central banker's speeches have softened on the downside and the persistent undershooting of inflation relative to our target should be important considerations in our policy deliberations. in particular, to the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling. 2. labor market slack has been greater than anticipated second, and related, although we have seen important progress on employment, this improvement has been accompanied by evidence of greater slack than previously anticipated. this uncertainty about the true state of the economy suggests we should be open to the possibility of material further progress in the labor market. indeed, with payroll employment growth averaging 180, 000 per month this year, many observers would have expected the unemployment rate to drop noticeably rather than moving sideways, as it has done. it is true that today ’ s unemployment rate of 4. 9 percent is only 0. 1 percentage point from the median sep participant ’ s estimate of the longer - run level of unemployment. however, the natural rate of unemployment is uncertain and can vary over time. indeed, in the sep, the central tendency of the projection for the longer - run natural rate of unemployment has come down significantly, from a range of 5. 2 to 6. 0 percent in june 2012 to 4. 7 to 5. 0 percent in june 2016 — a reduction of 1 / 2 to 1 percentage point. 5 we cannot rule out that estimates of the natural unemployment rate may