speech by the chairman noting that the federal reserve could purchase longer - term treasury securities in substantial quantities. see ben s. bernanke ( 2008 ), “ federal reserve policies in the financial crisis, ” speech delivered at the greater austin chamber of commerce, austin, tex., december 1. linkage between central bank actions and inflation expectations, and concerns about the effect of the size of our balance sheet are often heard in financial market commentary. lesson from conducting monetary policy in a crisis it is certainly too soon to fully assess all the lessons learned concerning the conduct of monetary policy during the crisis, but a few observations seem worth noting even at this early stage. first, commitments to maintain interest rates at a given level must be properly conditioned on the evolution of the economy. if they are to achieve their objectives, central banks cannot make unconditional interest rate commitments based only on a time dimension. the bank of canada has recently illustrated that need by revising its time commitment based on changing circumstances. to further clarify that the “ extended period ” language is conditional on the evolution of the economy, the fomc emphasized in the november 2009 statement that its expectation that the federal funds rate is likely to remain at an “ exceptionally low ” level for an “ extended period ” depended on the outlook for resource utilization, inflation, and inflation expectations following the anticipated trajectories. second, as i previously pointed out, firmly anchored inflation expectations are essential to successful monetary policy at any time. that ’ s why central banks have not followed the standard academic recommendation to set a higher inflation target – either temporarily or, as has been recently suggested, over the longer run – to reduce the likelihood of hitting the zero lower bound. although i agree that hitting the zero bound presents challenges to monetary policy, i do not believe central banks should raise their inflation targets. central banks around the world have been working for 30 years to get inflation down to levels where it can largely be ignored by businesses and households when making decisions about the future. moreover, inflation expectations are well anchored at those low levels. increasing our inflation targets could result in more - variable inflation and worse economic outcomes over time. inflation expectations would necessarily have to become unanchored as inflation moved up. i doubt households and businesses would immediately raise their expectations to the new targets and that expectations would then be well anchored at the new higher levels. instead, i fear there could be a long learning process, just as when inflation trended down over recent decades. moreover,

relied to a great extent on educational institutions. the information collected by the department of education indicated that the percentage of employed individuals who took courses specifically to improve their current job skills rose between 1991 and 1995 ; by 1995, four of every ten full - time workers aged 35 to 54 had sought to upgrade their skills. the survey shows that growing proportions of workers with a high - school education or less and of those in production and craft jobs sought additional training ; however, college graduates and those in professional occupations still reported the highest incidence of additional coursework - - almost 50 percent. thus, learning does seem to beget perhaps both a capacity as well as a desire for more learning. this finding should underscore the need to begin the learning process as early as possible. in the long run, better child - rearing and better basic education at the elementary and secondary school levels are essential to providing the foundation for a lifetime of learning. at the same time, we must be alert to the need to improve the skills and earning power of those who appear to be falling behind. we must also develop strategies to overcome the education deficiencies of all too many of our young people and to renew the skills of workers who have not kept up with the changing demands of the workplace. the recognition that more productive workers and learning go hand - in - hand is becoming ever more visible in schools and in the workplace. expanded linkages between business and education should be encouraged at all levels of our education system. building bridges between our educational institutions and the private business sector should have payoffs in how well graduates are prepared to meet the challenges of an increasingly knowledge - based global economy. indeed, a recent study argues that we need not rely on colleges and universities to teach “ the new basic skills ” to prepare workers for jobs in a knowledge - based economy ; that foundation could be built in high schools if only more high schools were to ensure that graduates left with not only essential basic reading and computational skills, but also with training in how to solve semi - structured problems, how to make oral presentations, and how to work in diverse groups5. those researchers argue for a better connection between secondary school curricula and business needs - - “ vocational education ” in a very broad sense rather than the traditional narrow one. 4 jacob mincer, “ on the job training : costs, returns, and some implications, ” journal of political economy, vol. 70, supplement ( october 1962 ), pp. 50 - 79 ; and james