I think it will directly go into headline inflation, cause energy prices are important component of that. So I expect headline inflation to actually be elevated in the middle of this year.

Of course, if energy prices come back down or stabilize and that won't add more to inflation. So right now, my view on inflation is we're looking at inflation rate for the year as a whole of something like two and three quarters per cent, but of course it depends what happens with energy prices.

Clearly, we can get into a 3% inflation. I think market expectations right now are for CPI to be something like 3% or 4% over the next year.

But it really depends on what happens. Both in terms of how high do energy prices get, but also how long they stay high or whether they come back down.

Clearly, higher energy prices does add a little bit to core inflation. You think about air fares, which is part core inflation, but is influenced by fuel prices. So I expect that to add maybe a 10-th or two to core inflation over the year, the energy price component.

But we've seen tariff rates come down. We've seen some other, I think, more positive signs on underlying inflation. So overall, I'm kind of where I've been for a while with cornflation around 2.5% this year.

Monetary policy today is really well positioned, given where all of those dynamics have been playing out and well positioned to kind of wait and see on some of the effects of what's happening today.

This isn't, I'm not saying we're just in some kind of weak can't act. I think this monetary policy is exactly where it needs to be and then we can respond if the situation changes.

Clearly with the conflict in the Middle East that changes out a bit. So I've been bringing down my forecast for growth this year probably somewhere between 2 and 2 and 1% for growth this year.

An unemployment rate probably staying around where it is now 4.3%. And an economy that's continuing to grow but roughly roughly at trend again driven by consumer spending and investments especially in AI.

We've seen the labor market much more stable now, definitely not a labor market that's weakening based on the economic indicators.

That said, if you look at the surveys, including the survey that we do and the conference board survey, that's not how people are feeling about the labor market. Definitely we've seen a continued process of people being more pessimistic about the labor market.

Monetary policy based on all the kind of historical evidence takes about a year to have its full effect on the economy and even longer on inflation. So we always have to be forward looking.

I do expect underlying inflation eventually later this year to start coming back down because the effects of the tariffs on inflation will start to wane. I do expect a continuation of the positive movement in underlying inflation.

America has the best productivity, highest productivity in the world. We are a remarkably resilient innovative, dynamic economy.

And I think technology is making a big difference, not just AI, but more broadly, we've seen productivity growth. That's actually been above par for the past six years.

I think we're at that level. If you look at all the different indicators, pretty much all of them are telling us that compensation is continue to grow real.

Compensation is growing and it's growing in a way that's consistent with the productivity growth we're seeing. So to my mind, the labor market, and whether you look at the unemployment rate or and you look at wage growth, these are not factors pushing up inflation at all.