clear signal. finally, at 4. 1 percent, the unemployment rate is notably higher than a year ago but has flattened out in recent months and remains historically low. 1 / 2 bis - central bankers'speeches inflation the labor market has cooled to the point where it is no longer a source of significant inflationary pressures. this cooling and the substantial improvement in broader supply conditions have brought inflation down significantly over the past two years from its mid2022 peak above 7 percent. progress on inflation has been broad based. estimates based on the consumer price index and other data released this week indicate that total pce prices rose 2. 3 percent over the 12 months ending in october and that, excluding the volatile food and energy categories, core pce prices rose 2. 8 percent. core measures of goods and services inflation, excluding housing, fell rapidly over the past two years and have returned to rates closer to those consistent with our goals. we expect that these rates will continue to fluctuate in their recent ranges. we are watching carefully to be sure that they do, however, just as we are closely tracking the gradual decline in housing services inflation, which has yet to fully normalize. inflation is running much closer to our 2 percent longer - run goal, but it is not there yet. we are committed to finishing the job. with labor market conditions in rough balance and inflation expectations well anchored, i expect inflation to continue to come down toward our 2 percent objective, albeit on a sometimes - bumpy path. monetary policy given progress toward our inflation goal and the cooling of labor market conditions, last week my federal open market committee colleagues and i took another step in reducing the degree of policy restraint by lowering our policy interest rate 1 / 4 percentage point. we are confident that with an appropriate recalibration of our policy stance, strength in the economy and the labor market can be maintained, with inflation moving sustainably down to 2 percent. we see the risks to achieving our employment and inflation goals as being roughly in balance, and we are attentive to the risks to both sides. we know that reducing policy restraint too quickly could hinder progress on inflation. at the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment. we are moving policy over time to a more neutral setting. but the path for getting there is not preset. in considering additional adjustments to the target range for the federal funds rate, we will carefully assess incoming data, the evolving outlook,

recession demands that capital and labor be reallocated. but, the reallocation of these resources to new sectors and companies has been painfully slow and unnecessarily interrupted. we are now feeling the ill effects. if policymakers fail to give the supply side of the economy more considered attention, we will find the new normalists to be right. if untreated, the cyclical becomes structural. persistent weakness in the labor markets, in effect, permanently disqualifies more workers from a place in the labor force. the natural rate of unemployment moves higher and potential gdp falls. and substantial harm is done to our well - being, threatening to demoralize our populace who knows better. but, this need not be so. fiscal authorities should resist the temptation to increase government expenditures continually to compensate for shortfalls of private consumption and investment. a strict economic diet of fiscal austerity has greater appeal, a kind of penance owed for the excesses of the past. but root - canal economics does not constitute, in my view, optimal economic policy. the united states would be better off with a third way : pro - growth economic policy. after all, it is stronger growth that the u. s. and world economies most urgently need. the fiscal authorities should begin this exercise by asking two questions : how big a government is desired? and how is it to be funded? we can no longer afford the answers to each of these questions to be at odds. but, the conduct of fiscal policy should not stop there. the government can fund its endeavors in ways that are growth - friendly or growth - stifling. we can no longer afford to be indifferent to the choice. the adoption of pro - growth economic policies would strengthen incentives to invest in capital and labor over the horizon. it would place the country ’ s economic potential at the center of the policy nexus. pro - growth policies would give us the best opportunity to bring unemployment rates down dramatically. of course, it demands a highly mobile, educated workforce, and much work needs to be done there. but the good news is that the united states still has the most dynamic, resilient labor force in the world, and the deepest, most liquid capital markets. it is strong growth that can do more to increase government revenues. it is strong growth that can most effectively defease outsized liabilities. and it is strong growth that can pave the way for robust job creation and higher living standards. pro