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

. by contrast, adopting a currency board more than two decades ago, during a crisis, bulgaria shifted to a fixed exchange rate regime, out of which the only exit strategy is joining the euro area. what we need in order to move forward on the convergence path towards euro adoption is, first of all, to understand there is no substitute for a coherent economic policy mix, which should remain so even in election years. we need economic convergence, but the process should be a balanced one, so as to preserve macroeconomic equilibria and safeguard competitiveness. it is important that europe remains united. therefore, i want to pay homage to baron snoy, who has been instrumental in promoting romania ’ s and bulgaria ’ s further integration into the economic and monetary union. i have known him since the first event we hosted in june 2011, and have always found in him not only a wise man, dedicated to the european project, but also a friend of romania, with a vast knowledge of our history and culture. he has also played an important role in bringing together europhile experts that are trying to find solutions to the daunting issues facing europe nowadays. allow me to also extend a word of gratitude to radu deac, the chairman of elec romania since its establishment, for his steady contribution to promote romania in europe and europe in romania. it is not that the eurozone does not have its own problems, yet the strengthening of its governance framework is what one may call “ work in progress ”. it is our duty, i think, to keep believing in the european project, as the only valid one for securing peace and prosperity on our continent. as i have previously stated, whenever obstacles emerge, i cannot help recalling the words of jean monnet, one of the eu founding fathers : “ europe will be forged in crises and will be the sum of the solutions adopted for those crises ”. i trust that this conference, which has a lot of outstanding panellists, will address those problems as well. among the speakers, i am particularly pleased to see jeffrey franks, another old friend of romania, with whom we had a fruitful co - operation in the past. on this note, allow me to finish and wish every success to the works of this conference. thank you. 2 / 2 bis central bankers'speeches