excess capacity in manufacturing across much of the world. in the 2 / 6 bis central bankers'speeches united states, for example, the manufacturing capacity utilization rate was only 76. 4 percent in november, about 2 percentage points below its average since 1972. third, for manufactured goods, there may be more scope for substituting capital for labor, and / or lowering labor costs by importing labor - intensive intermediate goods. to the extent that this margin of adjustment is available, it would tend to dampen the impact of higher wage costs on prices of manufactured goods. finally, the so - called “ amazon ” effect, which results in greater price transparency for buyers, may weigh disproportionately on goods prices. although inflation remains somewhat below the fomc ’ s 2 percent objective on a year - over - year basis, i still anticipate that it will stabilize around that level over the medium term. as i noted earlier, above - trend growth should tighten the labor market further, pushing up wage inflation and eventually services prices. in fact, we have already seen some increase in inflation in recent months. over the three months ending with november, core personal consumption expenditure prices rose at a 1. 8 percent annual rate, up from a corresponding rate of just 0. 4 percent last may. the pronounced slowing of core inflation during the first half of 2017 was due, in part, to transitory factors, such as a sharp fall in prices for cellular phone services. those influences have been temporarily depressing the year - over - year figures. when these transitory influences drop out of the year - over - year numbers this spring, the inflation rate is likely to move higher. importantly, even as inflation undershot the fomc ’ s objective over the past year, inflation expectations have been broadly stable. i would be much more concerned if low inflation outcomes were contributing to a decline in inflation expectations. that would make it more difficult to push inflation back toward our 2 percent objective and would increase the risk of getting stuck at the effective lower bound for interest rates following the next economic downturn, which inevitably will come. even if inflation were to remain somewhat below 2 percent over the near future, that might not be a serious problem, if the economy were to continue to perform well in other respects. to me, it would imply that the unemployment rate associated with “ maximum employment ” is lower than current estimates and that we could let the labor market tighten a bit further. this would be a

to formulate a set of public disclosure guidelines that make sense for an increasingly integrated financial market. the working group will assess the extent to which the pilot data can provide a meaningful basis for comparing risk management practices as well as the level and types of risk across institutions and across countries. the basel committee supports this pilot approach. it limits the burden on the banking industry and at the same time makes clear that the private sector has a key role to play in improving disclosure and enhancing market discipline. firms participating in this program will have the opportunity to shape the exercise and influence the interpretation of its results. through their participation, these firms will be sending a clear signal about their willingness to improve market discipline. these have not been easy times for banks. as a regulator, i cannot help but underscore the essential role banks play in the global marketplace. by intermediating credit between savers and investors and providing liquidity to the financial sector, banks are the essential link in well - functioning economies. thus, while capital levels and risk management policies are without question important, they do not take precedence over the responsibilities of bankers to serve their purpose in a schumpeterian world of creative destruction. this most fundamental of responsibilities involves the use of credit judgment. by this i mean that bankers must not lend to excess when times seem good and then lend too little when times appear more difficult. this is an ongoing obligation of banks and is no less so as we approach the century date change. with roughly six weeks to go before year - end, i believe it critical that banks approach the new year with these thoughts in mind and i call on them to be attentive to providing for their customers ’ reasonable needs. by reasonable needs, i have in mind that banks should think twice about huge demands based on what seems to be customers ’ excessive concern about y2k, but grant appropriate credit for realistic needs, even if this involves somewhat greater use of their own balance sheets than would usually be the case. to aid in the year - end transition period, the federal reserve system and the federal reserve bank of new york have announced a variety of steps to assure adequate liquidity in wholesale markets and promote financial market stability. we approved last month an expanded range of acceptable collateral for discount window and payments system risk purposes. in addition, there are in place a number of measures to ensure that an ample supply of cash will be available to meet possible increases in the demand for cash over the transition period. further, the federal reserve