keep a close eye on inflation with the goal of keeping it near 2 percent. looking ahead, my colleagues on the fomc and i expect that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years. this judgment reflects several factors. first, interest rates, and financial conditions more broadly, remain favorable to growth. second, our financial system is much stronger than before the crisis and is in a good position to meet the credit needs of households and businesses. third, federal tax and spending policies likely will continue to support the expansion. and, fourth, the outlook for economic growth abroad remains solid despite greater uncertainties in several parts of the world. what i have just described is what we see as the most likely path for the economy. of course, the economic outcomes we experience often turn out to be a good deal stronger or weaker than our best forecast. for example, it is difficult to predict the ultimate outcome of current discussions over trade policy as well as the size and timing of the economic effects of the recent changes in fiscal policy. overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate. monetary policy over the first half of 2018 the fomc has continued to gradually reduce monetary policy accommodation. in other words, we have continued to dial back the extra boost that was needed to help the economy recover from the financial crisis and recession. specifically, we raised the target range for the federal funds rate by 1 / 4 percentage point at both our march and june meetings, bringing the target to its current range of 1 - 3 / 4 to 2 percent. in addition, last october we started gradually reducing the federal reserve ’ s holdings of treasury and mortgage - backed securities. that process has been running smoothly. our policies reflect the strong performance of the economy and are intended to help make sure that this trend continues. the payment of interest on balances held by banks in their accounts at the federal reserve has played a key role in carrying out these policies, as the current monetary policy report explains. payment of interest on these balances is our principal tool for keeping the federal funds rate in the fomc ’ s target range. this tool has made it possible for us to gradually return interest rates to a more normal level without disrupting financial markets and the economy. as i mentioned, after many years of running below our longer - run objective of 2

20 job openings for every 10 unemployed job seekers. by early 2023, the unemployment rate fell to 3. 4 percent, its lowest level in 60 years. in the last year and a half, labor demand has moderated, as restrictive monetary policy helped bring aggregate demand in line with supply and eased inflationary pressure. at the same time, labor supply grew rapidly, and now labor demand and supply are more balanced. while the overall labor market remains solid, it has cooled noticeably this year and is now less tight than it was on the eve of the pandemic. in august, the unemployment rate stood at 4. 2 percent, having risen by almost a 1 / 2 percentage point over the past 12 months. and, in recent months, the number of job openings relative to unemployed job seekers has fallen to just below its pre - pandemic range. 1 / 7 bis - central bankers'speeches as labor demand and supply are now more evenly balanced, it may become more difficult for some individuals to find employment. for example, younger workers could experience more hurdles as they look for that first job that will launch them on a longer career path. over the past 12 months, the share of 16 - to 24 - year - olds in the labor force who are unemployed has risen over 1 percentage point, notably larger than the overall increase. such data are consistent with a report in the most recent beige book, a compilation of anecdotal information from around the country shared with fed officials before our meetings, indicating some recent graduates are facing unexpected difficulties finding suitable jobs. 2 it is also the case that less - educated and minority workers could face greater hurdles, as they tend to benefit more from tighter labor markets and suffer more from weakening economic conditions. the slowing of the solid labor market has come alongside a significant easing in inflationary pressure. inflation was 2. 5 percent over the 12 months ending in july, notably closer to our 2 percent target than a year earlier - when inflation was 3. 3 percentand far below its peak of 7 percent in mid - 2022. in recent months, the upside risks to inflation have diminished, and the downside risks to employment have increased. in response to these changing conditions, i whole heartedly supported the decision at last week's federal open market committee ( fomc ) meeting to lower our policy interest rate by 1 / 2 percentage point. the fomc, of which i am a member, is the federal reserve's primary monetary