for release on delivery 1 : 15 p. m. est ( 12 : 15 p. m. cst ) january 19, 2023 staying the course to bring inflation down remarks by lael brainard vice chair board of governors of the federal reserve system at the university of chicago booth school of business chicago, illinois january 19, 2023 inflation has declined in recent months, which is important for american households, businesses, and consumers. inflation is high, and it will take time and resolve to get it back down to 2 percent. we are determined to stay the course. 1 financial conditions have tightened considerably over the last year as the federal reserve and foreign central banks have tightened policy. real yields have risen significantly across the curve over the past year : 2 - year yields on treasury inflationprotected securities ( tips ) have risen more than 4 - 1 / 2 percentage points to 2. 1 percent, and 10 - year tips yields have risen more than 2 - 1 / 4 percentage points to 1. 2 percent. short - term real interest rates have moved into decidedly positive territory. 2 mortgage rates have doubled. 3 inflation has been declining over the past several months against a backdrop of moderate growth. yesterday ’ s industrial production index points to a significant weakening in the manufacturing sector, and the retail sales report points to a further moderation in consumer spending. looking forward, weaker readings on real income, wealth, and sentiment, along with indicators of spending on services, such as the ism services index, point to subdued growth in 2023. 4 real disposable personal income declined, on net, at an annual rate of 4. 1 percent in the first three quarters of 2022, i am grateful to kurt lewis for his assistance on these remarks. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. for instance, the expected 3 - month t - bill rate is currently 4. 7 percent, 1. 5 percentage points above the 3 - month 3. 2 percent median projection of the 2023 : q1 annualized total pce ( personal consumption expenditures ) inflation rate in the january blue chip survey. in addition, over the course of the past year, investment - and speculative - grade corporate bond spreads over treasury securities have widened by roughly 50 basis points and 100 basis points, respectively ; broad equity prices have declined by 17 percent ; and the trade - weighted dollar has appreciated by about 4 percent on net. the federal

- persistence. and, of course, the reemergence of additional shocks to commodities and intermediate inputs is possible. for a discussion of supply shocks and monetary policy in the context of recent events, see lael brainard ( 2022 ), “ what can we learn from the pandemic and the war about supply shocks, inflation, and monetary policy? ” summary of remarks delivered as part of a panel at the bank for international settlements annual meeting on june 24, basel, switzerland, https : / / www. federalreserve. gov / newsevents / speech / brainard20221128a. htm. for a description of one path to such an outcome, see andrew figura and chris waller ( 2022 ), “ what does the beveridge curve tell us about the likelihood of a soft landing? ” feds notes ( washington : board of governors of the federal reserve system, july 29 ), https : / / doi. org / 10. 17016 / 2380 - 7172. 3190. - 9nonetheless, substantial uncertainty remains. further shocks associated with the war and the pandemic are possible. while there has been some improvement in the outlook for activity and inflation in europe, there is uncertainty about the implications of china ’ s exit from zero covid for global demand and inflation, especially in commodities. turning to the implications for policy, my colleagues and i are committed to restoring price stability. the fomc moved policy into restrictive territory at a rapid pace and subsequently downshifted the pace of increases in the target range at its most recent meeting. this will enable us to assess more data as we move the policy rate closer to a sufficiently restrictive level, taking into account the risks around our dual - mandate goals. in parallel, balance sheet runoff is continuing. even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2 percent on a sustained basis.