that policy uncertainty is curbing their incentive to hire or invest. similarly, i ’ ve heard from consumers that policy uncertainty is curbing their incentive to spend. a public fomc contingency plan can help reduce the level of policy uncertainty being created by the fed. no contingency plan can ever be definitive. inevitably, the fomc will learn things that it did not expect to learn, and events will occur that it did not expect to occur. and so there may be conditions that force the fomc to deviate from a chosen plan. however, having a public plan, and couching its decisions against the backdrop of that plan, will enhance federal reserve transparency, credibility, accountability and consistency. thank you for listening. i ’ d be happy to take your questions. references kocherlakota, narayana r. 2010. “ two models of land overvaluation and their implications. ” presented at “ a return to jekyll island : the origins, history, and future of the federal reserve, ” jekyll island, ga. willardson, niel. 2008. “ actions to restore financial stability. ” the region ( december ), federal reserve bank of minneapolis. willardson, niel, and luanne pederson. 2010. “ federal reserve liquidity programs : an update. ” the region ( june ), federal reserve bank of minneapolis. bis central bankers ’ speeches

, as i ’ ve described, their input relies critically on information received from district residents. in this way, the federal reserve system is deliberately designed to give the residents of main street a voice in national monetary policy. fomc objectives i ’ ve said that fomc participants seek to adopt what they view as the appropriate policy choice. that provides a natural segue into my next topic : the policy objectives of the fomc. the fomc has a dual mandate, established by congress : to set monetary policy so as to promote price stability and maximum employment. the heart of the price stability mandate is the federal reserve ’ s inflation objective. the fomc communicates its inflation objective to the public in a number of ways. most prominently, at quarterly intervals, fomc meeting participants publicly reveal their forecasts for inflation in the longer run ( maybe five or six years ), assuming that monetary policy is optimal. those forecasts usually range between 1. 5 percent and 2 percent per year. they are often collectively referred to by saying that the federal reserve views inflation as being “ mandate - consistent ” if it is running at “ 2 percent or a bit under. ” congress has also mandated that the fomc set monetary policy so as to promote maximum employment. an important and ongoing communications challenge for the fomc is that it is much harder to quantify the maximum employment mandate than the price stability mandate. changes in minimum wage policy, demography, taxes and regulations, technological productivity, job market efficiency, unemployment insurance benefits, entrepreneurial credit access and social norms all influence what we might consider “ maximum employment. ” trying to offset these changes in the economy with monetary policy can lead to a dangerous drift in inflationary expectations and ultimately in inflation itself. looking back over the past four years : actions the national bureau of economic research ’ s business cycle dating committee serves as the official arbiter of precisely when recessions begin and end. 1 the committee has see national bureau of economic research ’ s business cycle dating committee. bis central bankers ’ speeches determined that what is commonly referred to as the great recession began in december 2007 and ended in june 2009. during that time period, real gross domestic product ( that is, gdp adjusted for inflation ) fell by 5 percent and unemployment nearly doubled. the federal reserve responded to the great recession and the associated financial crisis in a number of ways that fall roughly into two classes. first, the fed engaged in a vast amount of lending to