2012. bis central bankers ’ speeches the most important announcement which leads me to what i consider the third and most important announcement we made last week : the statement of our longer - range goals and strategy. for the first time, the entire 17 - member committee stated that, given inflation over the longer term is primarily determined by monetary policy, we are able to specify that an inflation rate of 2 percent, as measured by the index for personal consumption expenditures, is most consistent with our mandate. at the same time, we stated that we cannot specify an exact goal for employment because “ the maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market ” and that “ change over time and may not be directly measurable. ” 7 ] in the aviary of monetary policy makers, i am considered a “ hawk. ” i respect the fact that the congress of the united states has given the federal reserve a dual mandate of conducting monetary policy so as to have full employment and simultaneously maintain stable prices. i believe monetary policy is the principal determinant of long - term price stability. but i have long maintained that monetary policy is but one gear in the complicated gearbox that drives job creation. education and other structural aspects of our economy condition the nation ’ s job - creating capacity ; fiscal and regulatory policy, in turn, condition both the structure and dynamics of employment. i was delighted that the full committee recognized this and made it part of its official credo. in a world driven by rapid technological change and globalization, job - creating capital will flow not only to countries that conduct sound monetary policy but to places with the most welcoming, competitive tax and regulatory systems. this was underscored in a recent harvard business school ( hbs ) survey authored by jan rivkin and michael porter, two widely admired scholars on national competitiveness and economic development. their survey of hbs alumni found that the greatest impediments to investing in and creating jobs in the u. s. are our current tax code and regulatory burden and uncertainty, as well as lagging workforce skills. absent changes on these fronts, the rivkin / porter study found that more than 70 percent of respondents expect u. s. competitiveness to decline over the next three years, and along with it, job - creating investment. 8 thus for me, explicitly acknowledging that monetary policy ’ s impact on employment is transitory and uncertain is a cardinal event. it signals to the markets

and earn returns and borrow at the same interest rates as do our brethren in the rest of the country. which raises an important question : if monetary policy is the same here as everywhere else in the united states, why does texas outperform the rest? the answer is no doubt complicated by the fact that we are blessed with a comparatively great amount of nature ’ s gifts, a high concentration of military installations and other “ unfair ” advantages. but one cannot avoid the conclusion that one of those “ unfair ” advantages is that we have a legislature, based here in austin, that under both democrat and republican governors has over time crafted laws and regulations that encourage business expansion and job creation. they have conducted the fiscal affairs of the state so as to maintain confidence in the future. one might draw two lessons here : first, that germany ’ s finance minister, wolfgang schauble, is right when he says, “ if you want more private demand, you have to take people ’ s angst away ” by having responsible and disciplined fiscal policy ; 4 and second, that fiscal policy either complements monetary policy or retards its effectiveness as a propellant for job creation. herein lies the tale of the recent long - term policy and strategy statement issued by the fomc at the conclusion of its meetings last week. the recent pronouncements of the fomc many of you may have read that the fomc did three things after its two - day meeting tuesday and wednesday a week ago. first, the committee issued the usual policy statement, stating that it “ currently anticipates that economic conditions … are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. ” 5 there are presently 17 participants in fomc meetings : the 12 federal reserve bank presidents and the five current governors. ten out of the 17 people get to vote in any given year, with the governors and the federal reserve bank of new york always having a vote. i voted last year, and you may recall that together with mr. [ charles ] plosser of the federal reserve bank of philadelphia and mr. [ narayana ] kocherlakota of the minneapolis fed, i resisted the notion of a need for a statement indicating that monetary accommodation be tied to a specific date, be it in mid - 2013, late 2014 or any other. instead, i feel that the key should be to calibrate monetary policy according to the state or condition of the economy