conclusion in summary, the u. s. economy is continuing to grow at a moderate pace. i expect annual growth of around 3 percent in 2012 and 2013. prospects for labor markets will continue to improve, with job growth strengthening and the unemployment rate falling gradually over time. i believe inflation expectations will be relatively stable and inflation will moderate in the near term. however, with the very accommodative stance of monetary policy, we must guard against the medium - and longerterm risks of inflation and the potential for distortions such accommodation can create. finally, i believe we must also guard against an accelerationist approach to policy – one that calls for monetary policy to do more and more in an attempt to get to our objectives that much faster. the risks to economic stability of such an approach over the medium term could be quite high and could jeopardize our ability to achieve our longer - terms goals. bis central bankers ’ speeches

, which is likely to be a long and slow process. thus, while i expect a moderate recovery to continue and to strengthen over time, i expect to see only modest declines in the unemployment rate, with probably little change over the rest of this year, and then gradually falling to a range of 8 to 8½ percent by the end of 2012. inflation let me now turn to my outlook for inflation. just as growth has been weaker this year than many forecasters had anticipated, inflation has been higher than expected. monthly changes in inflation have moderated slightly from those seen earlier in the year as the prices of oil and other commodities have come down. however, measured on a year - over - year basis, both total inflation and core inflation continue to advance. i do anticipate that with many commodity prices now leveling off or falling, and inflation expectations relatively stable, inflation will moderate in the near term. our focus should not be so much on the near term as on the medium term. looking further ahead, we must continue to monitor this situation very carefully, particularly in this environment of very accommodative monetary policy. inflation most often develops gradually, and if monetary policy waits too long to respond, it can be very costly to correct. indeed, it is good to remember that the current inflationary environment is quite different from the one we faced a year ago when we embarked on the so - called qe2 policy to purchase $ 600 billion of long - term u. s. treasuries. at the time, inflation was falling and there were concerns about deflation – year over year, pce inflation was running about 1. 2 percent and core pce inflation ( excluding food and energy ) was under 1 percent. today, pce inflation is 2. 9 percent and core pce is running nearly 1. 7 percent. i would also note that unemployment was 9. 8 percent last fall compared to 9. 1 percent today. thus, with inflation higher and unemployment lower, it is not so surprising that some might question the need for the additional accommodation the fomc undertook in august and september – a point i will return to shortly. in this environment, i think it is very important that we refrain from actions that risk fueling a steady rise in inflation or inflation expectations over the medium term. we must not become too sanguine that high unemployment will lead to low inflation. the lesson of the 1970s is clear – high unemployment or low resource utilization is