for release on delivery 8 : 00 a. m. est ( 2 : 00 p. m. local time ) january 8, 2025 challenges facing central bankers remarks by christopher j. waller member board of governors of the federal reserve system at lectures of the governor organization for economic cooperation and development paris, france january 8, 2025 thank you, alvaro, and thank you for the honor of initiating this new series of lectures from central bankers. 1 i will begin with a few words on the u. s. economic outlook and the implications for monetary policy. but on this occasion, i thought it appropriate to then widen my perspective, to address what i see as the leading challenges that oecd economies face that are of particular importance to central bankers in how we approach monetary policy and our other responsibilities. i continue to believe that the u. s. economy is on a solid footing. real gross domestic product ( gdp ) growth has been above 2 percent for eight of the last nine quarters and is expected to grow above 2 percent in the fourth quarter of 2024. despite this robust economic growth, the labor market softened over 2024, and employment is now near what i judge to be the federal open market committee ’ s ( fomc ) maximumemployment objective. i have seen nothing in the data or forecasts that suggests the labor market will dramatically weaken over coming months. with regard to inflation, after a period of rapid disinflation in 2022 and 2023, progress appears to have stalled in the final months of 2024. our latest reading of core personal consumption expenditures ( pce ) inflation is 2. 8 percent for the 12 months ending in november. this is down just a bit from where it was a year earlier, at 3. 2 percent. this minimal further progress has led to calls to slow or stop reducing the policy rate. however, i believe that inflation will continue to make progress toward our 2 percent goal over the medium term and that further reductions will be appropriate. let me explain why i expect inflation to continue toward our goal. first, as we saw a year ago when inflation briefly increased, progress has been uneven, but the views expressed here are my own and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. - 2disinflation is more apparent if one smooths through the recent upticks. to tease out the underlying trend in inflation, i often look at the six - month percent

2017 – inflation rises towards target again in 2014, monetary policy came to focus on rapidly returning inflation to target and anchoring inflation expectations. the repo rate was cut by 0. 5 percentage points to 0. 25 per cent in july and further to zero per cent in october. at the beginning of 2015, inflation was still very low and inflation expectations were developing in a worrying manner ( see figure 3 ). the repo rate was cut further in 2015 and early 2016 to - 0. 5 per cent. in addition, the riksbank started purchasing government bonds on a large scale. the expansionary policy gradually started to have effect. growth rose and employment increased. inflation started to show a more - or - less rising trend in 2015 and again reached the inflation target in 2017. inflation expectations also turned upwards and long - term expectations are now again anchored around the target ( figure 4 ). the conclusion from the period 2015 – 2017 that i would particularly like to emphasise is the following : ( iii ) it may take a long time with a highly expansionary policy to bring inflation up – but it is possible. it could be claimed that neither is this conclusion particularly remarkable. it is the conclusion that comes to mind first, having observed monetary policy and the development of inflation in sweden in recent years. but, in light of the current international debate, it is nevertheless important and worth bringing up. 13 for example, the international monetary fund ( 2015 ) and svensson ( 2017 ) argue that the costs are greater than the benefits, while filardo and rungcharoenkitkul ( 2016 ) and gourio, kashyap and sim ( 2016 ), for example, draw the opposite conclusion. 8 conclusion ( iii ) : it may take a long time with a highly expansionary policy to bring inflation up – but it is possible as i have already mentioned, the first part of this lesson provides an important reason for not losing sight of inflation and inflation expectations. if this is allowed to happen, the way back may be difficult and arduous. in sweden ’ s case, cpif inflation was systematically below target for about six years, 2011 – 2016, occasionally by a considerable margin. to halt and then reverse the fall in inflation, we cut the repo rate to levels it had never previously approached and, in addition, the riksbank purchased large amounts of government securities. significant communication interventions were also required, for example when it came to describing which development