00:00The actions taken by the FOMC in the latter part of last year have brought these risks into better balance.
00:06By reducing the target range for the federal funds rate by a cumulative 75 basis points last year,
00:11the FOMC has moved the modestly restrictive stance of monetary policy closer to neutral.
00:16Monetary policy is now well positioned to support the stabilization of the labor market
00:21and the return of inflation to the FOMC's longer run goal of 2%.
00:25My base case for the economic outlook is quite favorable.
00:29Looking ahead, I expect tariffs will have a largely one-off effect on prices that will be fully realized this year.
00:37As a result, I anticipate inflation will peak at around 2.75% to 3% sometime during the first half of the year before starting to fall back.
00:45I expect inflation will be just under 2.5% for the year as a whole before reaching the FOMC's 2% target in 2027.
00:52I expect the economy to grow above trend this year with real GDP growth between 2.5% and 2.75%.
01:00This pickup from last year's pace is in part due to a first quarter rebound from the effects of the government shutdown,
01:06but it's also fueled by tailwinds from fiscal policy, favorable financial conditions,
01:11and increased investments in artificial intelligence.
01:15With my forecast of above trend growth, I expect the unemployment rate to stabilize this year
01:19and then to gradually come down over the next few years.
01:23Of course, there's always uncertainty when looking to the future,
01:26so I'll remain data-dependent as the year takes shape.
01:29As the December FOMC statement said,
01:32in considering the extent and timing of additional adjustments to the target range for the federal funds rate,
01:36the committee will carefully assess incoming data, the evolvement and the balance of risks.
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