narayana kocherlakota : opening remarks opening remarks by mr narayana kocherlakota, president of the federal reserve bank of minneapolis, at a “ conversations with the fed ” event, federal reserve bank of minneapolis, minnesota, 9 january 2014. * * * thank you all for coming out tonight to take part in this public discussion about the federal reserve, monetary policy and the economy. as many of you know, this event is part of a broader series that we call conversations with the fed, which has featured presentations on issues ranging from financial payments to the health of the banking industry to the size of the fed ’ s balance sheet. all of these events have been well attended and, like good economists, we have duly noted this demand and plan to continue to supply these events in the future. today ’ s conversation is taking place in the headquarters of the ninth ( of 12 ) federal reserve districts. but the ninth district is a far - flung one that includes the states of montana, north and south dakota, minnesota and parts of wisconsin and michigan. for that reason, we hold similar conversations throughout the ninth district. indeed, we ’ re redoubling those efforts this calendar year in honor of the centennial of the opening of the 12 reserve banks and the start of the work undertaken by the federal reserve system. the video that we just watched gives you an overview of some of that work by the people who are actually doing it : the many employees of the federal reserve system. we also have a new website we ’ ve created at federalreservehistory. org. i encourage you to visit this site to learn more about the people, places and events that have shaped federal reserve history. there are some fascinating historical tidbits on the website that i could go on about at length, but i realize you all may not be quite as excited about fed history as i am. i will say that if you have even the slightest curiosity about things like how the cities were chosen to host reserve banks, i would encourage you to attend an installment of conversations with the fed on may 8. it will feature niel willardson, our general counsel and corporate secretary, who be talking about the history of the federal reserve act and answering the perennial question of why minneapolis and not st. paul. i won ’ t steal niel ’ s thunder for that presentation, but i do want to address one of the things that i think has changed the most over the federal reserve ’ s history, and

that is our communication with the public. a hundred years ago, congress created a system that was designed specifically so that the residents of main street would have a voice in monetary policy. the ways in which we gathered information from main street have obviously changed considerably over the years, as new technologies have come into being, but this fact - finding continues to be an important part of how we conduct monetary policy. communication is a two - way street, however. during the past century, the federal reserve ’ s communications to the public about its monetary policy actions have also evolved greatly. the pace of change has been especially rapid in the past eight years under chairman bernanke ’ s leadership. during that time, the federal reserve has specified an explicit target for inflation, begun holding regular press conferences and greatly expanded its use of forward guidance – that is, its communications about the likely future evolution of policy. so, as the federal reserve system plans for its second century, i would say that the importance of two - way communication is a key lesson from the system ’ s first century. in order for the fed to continue to be effective, it needs to communicate its policy decisions transparently to the public. conversely, it also needs the public ’ s input on how those policies are affecting them. events like the one today are a key part of fostering that two - way communication. with that as context, let me turn now to the business at hand : the current state of the economy. throughout my remarks, i ’ ll be referring to the federal open market committee, or bis central bankers ’ speeches fomc. it meets eight times per year to set the course of monetary policy in the united states. the presidents of the 12 reserve banks and the governors of the federal reserve system all participate fully in the deliberations at those meetings. however, only the governors, the president of the federal reserve bank of new york and four other presidents actually vote on the committee ’ s actions. this last set of four presidents changes annually. in 2014, i will be a voting member, along with the presidents of the philadelphia, cleveland and dallas federal reserve banks. as you listen to me talk about the economy and the stance of monetary policy, always remember : the views you will hear tonight are my own and not necessarily those of my colleagues on the federal open market committee. congress has mandated that the fomc make monetary policy so as to promote two objectives : price stability and maximum employment. beginning in 2012,