my view, it represented the committee's final step in the policy recalibration phase. the target range now reflects 100 basis points of cuts since september, and the policy rate is now closer to my estimate of its neutral level, which is higher than before the pandemic. but given the lack of continued progress on lowering inflation and the ongoing strength in economic activity and in the labor market, i could have supported taking no action at the 1 / 9 bis - central bankers'speeches december meeting. still, i am pleased that the post - meeting statement continued to reference a flexible and data - dependent approach for considering future policy adjustments. it is important that we remain focused on returning inflation to 2 percent. i expect that the coming months should bring clarity on the incoming administration's policies and the carry over of inflationary pressures from 2024, reflecting private spending decisions and an apparent faster spend - out of existing federal government appropriations in recent months. it will be very important to understand how these factors will affect economic activity and inflation going forward. the economy towards the end of 2024 and risks to the outlook the u. s. economy remained strong through the end of last year, with solid growth in economic activity and a labor market near full employment. however, core inflation remains elevated, and i continue to see upside risks to inflation. the rate of inflation declined significantly in 2023, but this progress appears to have stalled last year with core inflation still uncomfortably above the committee's 2 percent goal. the 12 - month measure of core personal consumption expenditures inflation - which excludes food and energy prices - moved back up to 2. 8 percent in october and november, only slightly below its 3. 0 percent reading at the end of 2023. progress has stalled since the spring of last year mostly due to a slowing in core goods price declines. persistently elevated core inflation continues to reflect pressures on housing services prices, possibly due to an increase in demand for affordable housing amid an inelastic supply. it also appears to be originating from a few other major components in recent months, such as in goods and in services with imputed prices. gross domestic product increased at a solid pace in the third quarter, maintaining the momentum from the previous four quarters. growth continued to be driven by private domestic final purchases, as personal consumption, and retail sales in particular, strongly increased in the third quarter, more than offsetting further weakness in housing activity due to high mortgage rates. the latest data suggest continued

strength in consumer spending in the fourth quarter as retail sales and sales of light vehicles continued to rise appreciably. post - election consumer sentiment appears to be improving, but it remains well below pre - pandemic levels likely because of higher prices. and since housing, food, and energy price increases have far outpaced overall inflation since the pandemic, lowerincome households have experienced the negative impacts of inflation hardest, especially as these households have limited options to trade down for lower - cost goods and services. the most recent labor market report shows that payroll employment gains rebounded in november, following a temporary drag in october from hurricanes helene and milton and the boeing strike. on balance, job gains averaged about 130, 000 over those two months, a pace only slightly below the average gains in the second and third quarters. the unemployment rate rose to a still low 4. 2 percent in november, but it has moved sideways since july. while unemployment is notably higher than in 2023, it is still at a historically low level and below my and the congressional budget office's estimates of full employment, and we will receive the december employment report tomorrow. 2 / 9 bis - central bankers'speeches the labor market has loosened from the extremely tight conditions of the past few years. the ratio of job vacancies to unemployed workers has remained close to the historically elevated pre - pandemic level in recent months. but there are still more available jobs than available workers, a condition that before 2018 had only occurred twice for a prolonged period since world war ii, further signaling ongoing labor market strength. wage growth remains indicative of a tight labor market and above the pace consistent with our inflation goal. the rise in the unemployment rate last year largely reflected weaker hiring, as job seekers entering or re - entering the labor force took longer to find work, while layoffs remained low. although there has been some cooling in labor demand and the labor force participation rate declined a bit further in november, the household survey may have failed to capture the usual seasonal hiring ahead of the holidays due to the unusually early survey week and the late thanksgiving holiday. more concerningly, the labor market data have become increasingly difficult to interpret, as surveys and other measurements struggle to incorporate large numbers of new workers and to accurately account for other influences. as the dynamics of immigration and business creation and closures continue to change, it has become increasingly difficult to interpret the monthly data from the payroll and household surveys. it is crucial that