new ones, a process that economists generally believe improves matches. indeed, evidence suggests workers and firms have been fairly efficient at finding each other over the past couple of years. 5 high - quality job matches act like additional labor supply : both firms and workers are likely to be more productive when workers'skills and preferences are a good match for their employers'needs. on the demand side, labor demand was strong in 2021 and 2022. demand was so strong, in fact, that the job openings rate - that is, the monthly number of job openings relative to total employment - ran almost 50 percent above its pre - pandemic record all the way from july 2021 through july 2022. 6 but the job openings rate has declined roughly 30 percent from its peak, a sign that labor demand - while still robust - has cooled significantly. so the labor market has moved into better balance. importantly, given the strong labor supply growth, supply – demand imbalances can continue to ease even amid a solid pace of net job growth, as we have been seeing. indeed, i suspect that strong population growth helps resolve the puzzle that forecasters have faced over the past year, in which measures of labor market growthand growth of other economic variables, like consumption - have been solid even amid easing inflation. 7 as labor markets have moved into better balance, wage growth has cooled - which means that increases in the main cost business in the services sector have slowed, easing inflationary pressures. workers and families do not reap the benefit of higher wages if those gains are eaten up by inflation. for that reason, it is important that wage growth be consistent with 2 percent inflation over time. the u. s. economy is moving back toward that kind of wage growth, including in services industries : the 12 - month growth of average hourly earnings in private services has come down to about 4 percent from a peak pace above 6 percent in early 2022. and despite the cooling of wage growth, with inflation easing over the past year, we have seen broader wage increases again outpacing price gains, that is, real wage gains. but you may ask : what role has the fomc played in all of this? while supply conditions are beyond the control of monetary policymakers, the fomc can influence the pace of inflation by tightening monetary policy to slow the growth of aggregate demand. the fomc began raising its policy interest rate in early 2022 and proceeded expeditiously. these actions have damp

adriana d kugler : the outlook for the economy and monetary policy speech by ms adriana d kugler, member of the board of governors of the federal reserve system, at the weidenbaum center on the economy, government, and public policy, washington university in st. louis, st. louis, missouri, 3 april 2024. * * * thank you, andrew, and thank you for the opportunity to speak here today. 1 i am very pleased to be talking here at the weidenbaum center. as an economist currently working on policy, but with a long trajectory in research, i particularly appreciate the center's multidisciplinary approach to building bridges between these two applications of economics. the federal open market committee ( fomc ) has been working to lower inflation in the context of our dual mandate of maximum employment and price stability. today i will discuss economic developments in the u. s. and how i view the current stance of monetary policy in light of recent data and longer - run trends. since i am an economist, you will not be surprised that i will talk about recent economic developments by highlighting the dynamics of supply and demand. as you all know, inflation began to rise in 2021. by mid - 2022, 12 - month inflation, based on the personal consumption expenditures ( pce ) price index, was around 7 percentmuch too high and far above the fomc's 2 percent longer - run objective. but since that time, pce inflation has slowed significantly, declining to 5. 4 percent at the end of 2022, then to 2. 6 percent at the end of 2023, and then to 2. 5 percent in february. inflation can sometimes be hard to read from overall pce inflation figures due to the volatility of food and energy prices. for that reason, it is sometimes helpful to focus on " core " pce inflation, which excludes those categories and is a better guide to the direction of inflation. core pce inflation peaked at a rate above 5 - 1 / 2 percent in early 2022 but fell rapidly during 2023. in fact, the core pce disinflation we saw last year was the fastest since the early 1980s. the progress has sometimes been bumpy from month to month, and, indeed, january and february of this year showed a bit of firming in the inflation data. but the january numbers, in particular, featured some atypical or seasonal factors that