balance, in recent months. inflation remains below the federal reserve ’ s 2 percent symmetric objective, which has been true for most of the past seven years. the price index for core personal consumption expenditures ( pce ), which excludes food and energy prices and is a better indicator of future inflation than overall pce prices, increased 1. 7 percent over the 12 months through september. foreign growth remains subdued. while there are signs that the decline in euroarea manufacturing is stabilizing, the latest indicators on economic activity in china remain sluggish, and the news in japan and in many emerging markets has been disappointing. overall, it appears third - quarter foreign growth was weak, and the latest indicators point to little improvement in the fourth quarter. more broadly, the balance of risks remains to the downside, although there has been some improvement in risk sentiment in recent weeks. the risk of a disorderly brexit in the near future has declined significantly, and there is some hope that a u. s. – claudia sahm shows that a 1 / 2 percentage point increase in the three - month moving average of the unemployment rate relative to the previous year ’ s low is a good real - time recession indicator. see claudia sahm ( 2019 ), “ direct stimulus payments to individuals, ” policy proposal, the hamilton project at the brookings institution ( washington : thp, may 16 ), https : / / www. hamiltonproject. org / assets / files / sahm _ web _ 20190506. pdf. - 3china trade truce could avert additional tariffs. while risks remain, financial market indicators suggest market participants see a diminution in such risks, and probabilities of recessions from models using market data have declined. the baseline is for continued moderate expansion, a strong labor market, and inflation moving gradually to our symmetric 2 percent objective. the federal open market committee ( fomc ) has taken significant action to provide insurance against the risks associated with trade conflict and weak foreign growth against a backdrop of muted inflation. since july, the committee has lowered the target range for the federal funds rate by 3 / 4 percentage point, to the current range of 1 - 1 / 2 to 1 - 3 / 4 percent. it will take some time for the full effect of this accommodation to work its way through economic activity, the labor market, and inflation. i will be watching the data carefully for signs of a material change to the outlook that

the elb, the long delays necessitated for policymakers in nearly every jurisdiction to develop consensus and take action on unconventional policy sapped confidence, tightened financial conditions, and weakened recovery. economic conditions in the euro area and elsewhere suffered for longer than necessary in part because of the lengthy process of building agreement to act decisively with a broader set of tools. see janice c. eberly, james h. stock, and jonathan h. wright ( 2019 ), “ the federal reserve ’ s current framework for monetary policy : a review and assessment, ” paper presented at “ conference on monetary policy strategy, tools and communication practices, ” sponsored by the federal reserve bank of chicago, chicago, june 4, https : / / www. chicagofed. org / ~ / media / others / events / 2019 / monetary - policyconference / review - current - framework - eberly - stock - wright - pdf. 16 see board of governors of the federal reserve system ( 2019 ), “ minutes of the federal open market committee, july 31 – august 1, 2018, ” press release, august 1, https : / / www. federalreserve. gov / monetarypolicy / fomcminutes20180801. htm ; and board of governors ( 2019 ), “ minutes of the federal open market committee, october 29 – 30, 2019, ” press release, october 30, https : / / www. federalreserve. gov / monetarypolicy / fomcminutes20191030. htm. - 10 despite delays and uncertainties, the balance of evidence suggests forward guidance and balance sheet policies were effective in easing financial conditions and providing accommodation following the global financial crisis. 17 accordingly, these tools should remain part of the committee ’ s toolkit. however, the quantitative asset purchase policies that were used following the crisis proved to be lumpy both to initiate at the elb and to calibrate over the course of the recovery. this lumpiness tends to create discontinuities in the provision of accommodation that can be costly. to the extent that the public is uncertain about the conditions that might trigger asset purchases and how long the purchases would be sustained, it undercuts the efficacy of the policy. similarly, significant frictions associated with the normalization process can arise as the end of the asset purchase program approaches. for these reasons, i have been interested in exploring approaches that expand the space for targeting interest