lisa d cook : moving toward better balance and implications for monetary policy speech by ms lisa d cook, member of the board of governors of the federal reserve system, at the economic club of new york, new york city, 25 june 2024. * * * thank you, barbara. it is a fitting time to be speaking again to the economic club of new york, because this month marks two years since my first federal open market committee ( fomc ) meeting. 1 at that meeting, we kicked off a series of large interestrate increases, all of which i supported, because i am fully committed to bringing inflation sustainably back to our 2 percent target. as i said when i joined the board, i care about both sides of the dual mandate congress gives us, maximum employment and price stability. when inflation was well above target and the unemployment rate was historically low, we prioritized restoring price stability. over the past year, inflation has slowed, and labor market tightness has eased, such that the risks to achieving our inflation and employment goals have moved toward better balance. i think now is a good time to assess how the economy has evolved after rates have held steady at a restrictive level for nearly a year. today, i will provide a progress report on disinflation, give you my outlook on the economy, and share my views on how to ensure that monetary policy brings inflation fully back to 2 percent over time while being attentive to the risk of a slowing labor market. i will conclude my remarks with a few words about my role as chair of the board's financial stability committee. inflation as the u. s. and global economy recovered from the pandemic, rebounding demand came up against still - constrained supply, and inflation rose to the highest level in many years. in the past two years, 12 - month inflation in the pce price index has fallen from a peak above 7 percent to 2. 7 percent in april, and it likely moved a bit lower in may based on consumer and producer price data. however, after rapid disinflation in the second half of last year, progress has slowed this year. my focus remains on making sure inflation is on a path to return sustainably to 2 percent. how do i think about making that determination? to respond, i think it is helpful to look at the underlying data. some price components have clearly improved. food and energy price increases moderated significantly over the past two years as global commodity

the high swiss franc value are not only negative. for example, imported preliminary products for companies and consumer goods for households have become cheaper. finally, swiss firms and their employees have made huge efforts to deal with this difficult situation. overall, the snb expects moderate economic growth of close to 1 % for the year 2012. this modest economic momentum is likely to be reflected in a moderate increase in unemployment over the course of the next few quarters. the expected economic activity is lower than would be the case for normal capacity utilisation. this means there will be no inflationary pressure from this source. our conditional inflation forecast of mid - march 2012 shows that there is no risk of inflation in switzerland in the foreseeable future. the forecast also makes it clear that the threat of a deflationary trend has been kept in check. inflation rates are only temporarily negative. nevertheless, the monetary policy challenges for the snb remain very considerable. i would now like to go into a little more detail on our reflections on monetary policy, particularly with respect to the minimum exchange rate. reflections on swiss monetary policy after being announced on 6 september 2011, the minimum exchange rate was rapidly attained. when our press release was issued, at exactly 10 am, the euro was trading at a little over chf 1. 12. within minutes, the exchange rate exceeded the chf 1. 20 mark. seen from the outside, this may have created the impression that a minimum exchange rate can simply be generated by pressing a button and that such an exchange rate is a normal monetary policy measure which is straightforward to implement. that is far from being the case. a minimum exchange rate is an extreme measure, only to be introduced in a situation of massive overvaluation, with the aim of averting the worst developments. it is neither a panacea capable of solving all the problems facing the swiss economy, nor can it simply be implemented for any desired level, free of any risk. on the contrary. a minimum exchange rate can only be successfully implemented if there is a clear economic justification for its introduction, such as a massive overvaluation resulting from adverse developments on the foreign exchange market. within the framework of a system of flexible exchange rates, it is also important that it be internationally accepted, and that it is not seen as a competitive depreciation. finally, a vital element in the successful implementation of such an exchange rate is the central bank ’ s credibility, in other words, the belief that the central bank