a purely economic point of view, losses associated with pension fund commitments should be treated as bygones and thus in principle should not affect the willingness of firms to undertake new capital investments, except to the extent that they affect firms'ability to finance those investments. besides weak profits and the large decline in stock prices, the other obvious negative for the corporate sector is the evident deterioration in aggregate credit quality. the average spreads between yields on risky corporate bonds, such as bbb - rated bonds or high - yield corporate debt, and the yields on safe debt of comparable maturities are currently at elevated levels, equal to or above those seen in the 1990 - 91 recession. many companies have had their debt downgraded by ratings agencies, and corporate bond defaults during 2002 amounted to 3. 2 percent of the value of bonds outstanding, a rate above the 1991 peak in default rates. although these statistics are certainly worrisome, a closer examination reveals several mitigating factors. first, though average spreads of risky corporate debt remain high on an absolute basis, they have recently improved substantially. spreads on bbb - rated corporate debt have come down nearly one - third since their october 2002 peak, and high - yield spreads are down about one - fifth. risk as measured by credit default swaps has also come down substantially over the same period. at least some of the recent marked improvement in perceived default risk and market liquidity must arise from increasing confidence among investors that we have seen the last of the major accounting scandals that rocked the markets during the summer. if more time passes without new revelations of corporate wrongdoing and if the generally high level of risk aversion in markets continues to moderate ( perhaps with decreasing geopolitical risks ), we should see further declines in corporate yield spreads over this year. a second mitigating factor is that much of the measured deterioration in aggregate credit quality is actually concentrated in a few seriously distressed sectors, such as telecommunications, airlines, and energy trading firms, with a few high - profile cases making significant contributions. in particular, yield spreads in the telecom, cable, and media industries reached dizzying heights in mid - 2002, though recently these spreads have fallen quite markedly. remarkably, for the entire year 2002, telecom firms accounted for 55 percent of corporate bond defaults, by value. a similar story, though not quite so extreme, applies to energy and utility firms. when these most troubled sectors are excluded, the recent behavior of financial indicators for the corporate sector

on cpi inflation more than pce inflation. also, note that while the table frequently references inflation relative to a 2 percent rate, it was only for the last peak - rate episode for which the fomc had established a 2 percent rate of inflation to be most consistent over the longer run with its price - stability goal, per its first " statement on longer - run goals and monetary policy strategy " adopted in january 2012. 3 the data shown in figure 4 are revised data. 4 blinder ( 2023 ) labels the july 1995 episode as the " perfect soft landing " and identifies other " softish " landings ( see his table 1, page 119 ). blinder ( 2023 ) defines a softish landing as an outcome in which real gdp declines by less than 1 percent or there is no nber recession for at least a year after an fomc tightening cycle. 6 / 6 bis - central bankers'speeches