for the next several quarters before picking up in late 2024 and rising to 2½ % in 2025. as you know, we pay close attention to indicators of the balance between demand and supply in the economy, and these are now presenting a mixed picture. estimates of the 1 / 3 bis - central bankers'speeches output gap suggest the economy is now roughly in balance or even in slight excess supply. indicators of the labour market show it has eased considerably from overheated levels but still looks to be on the tight side. job vacancies have eased but remain higher than normal, and the unemployment rate has risen a bit but is still low. wage growth also remains elevated at 4 % to 5 %. what is clearer is that demand pressures have eased more quickly than we forecast in july. so what does that mean for inflation? we are already seeing more evidence that tighter monetary policy is reducing price pressures for many goods and services. and with the economy already or soon to be in excess supply, more downward pressure on inflation should be in the pipeline. but our outlook for near - term inflation is higher. let me explain. the effects of higher interest rates are most evident in the prices of durable goods, like furniture and appliances that people often buy on credit. and these effects have also spread to many semi - durables - a category that includes things like clothing and footwear - as well as many services excluding shelter. inflation in these categories is now running generally at or below 2 %. price increases for groceries, while still elevated at almost 6 %, have also eased and are expected to moderate further. despite this, we've revised up our outlook for inflation. higher energy prices, structural pressures in our housing market and stickiness in underlying inflation are all slowing the return to target. higher global oil prices have driven up gasoline prices, and we now expect oil prices to remain higher than we assumed in july. inflation in shelter prices is running above 6 %. part of this is due to higher mortgage interest costs following increases in our policy interest rate. but it also reflects higher rents and other housing costs, and these pressures are more related to the structural shortage of housing supply. finally, nearterm inflation expectations and wage growth remain elevated, and corporate pricing behaviour is normalizing only slowly. all this is making underlying inflation more persistent. the combined impact of all these factors is that we now expect inflation to be about 3½ % through to about the middle of next year. as excess

, i was committed to treating every consumer and institution fairly and respectfully and fostering open communication. this working group will follow those same principles. we are looking for ways to optimize our supervision and regulation to ensure it adapts to the on - the - ground realities of an evolving industry and changing consumer expectations while maintaining the safety and soundness of our banking system. let me close by saying a few words about monetary policy and the federal reserve ’ s dual mandate. as a community banker, it was my job to support local businesses and consumers. i draw upon this experience often when thinking about monetary policy, because it has given me a personal and practical understanding of how the federal reserve ’ s goals of fostering maximum employment and stable prices directly affects individuals as well as the broader financial system and economy. the congress has given the federal reserve independence to pursue these goals, because our work is critical to our economy, to businesses, to families, and to communities. i am deeply committed to fulfilling this mandate. 1 / 2 bis central bankers'speeches if confirmed by the senate, i will continue the important work i have begun and be committed to accountability, transparency, and clear communication in all of my responsibilities at the federal reserve. thank you for the honor of this hearing, and i look forward to answering the committee ’ s questions. 2 / 2 bis central bankers'speeches