roger w ferguson, jr : expectations commencement address by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the olin school of business, washington university in st. louis, st. louis, missouri, 16 may 2003. * * * dean greenbaum, distinguished trustees and faculty, and honored guests, i am pleased to be at the olin school today to congratulate this accomplished group of graduates. i hope today represents but one among many successful milestones to come. and my advice to the graduates is that they look back, not just forward, and thank the family and friends who supported them in school and helped to make today's achievement possible. i intend to do more than just wish the graduates success this afternoon. in fact, i will take a few minutes on this happy occasion for a discussion of economic conditions and policy. i will first explain what the federal reserve will be doing to ensure the best possible performance of the economic system that you are about to enter. then, i will discuss some steps that you can take to navigate better in that wider world. before i proceed, i should note that the views i will be expressing are my own and do not necessarily represent the views of other members of the federal open market committee or the federal reserve board. what to expect from the central bank let me first explain what you, and others graduating during this season, can expect from the central bank. to my mind, the most important potential contribution of monetary policymakers is to anchor inflation expectations so that private - sector decisions can be made as efficiently as possible. we can do this because, as with any central bank, our control over the size of our balance sheet determines the value of our country's money and the general price level in the long run. we must do it because our enabling legislation directs the federal reserve to seek monetary conditions fostering “ maximum employment, stable prices, and moderate long - term interest rates. ” the economics profession has learned, in part from the bitter experience of the 1970s, that those three objectives collapse into one in the long run. that is, only in an environment of stable prices will households and firms be able to direct their complete attention to producing, investing, and saving so that employment will be at its maximum over the long run. and at the same time, when investors are not concerned about a generally rising level of prices for goods and services, inflation premiums will be compressed and

donald l kohn : economic outlook remarks by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the money marketeers of new york university, new york, new york, 4 october 2006. * * * i am pleased to be with you tonight to discuss my views on current economic conditions and the economic outlook. these have been challenging times for economic forecasters and policymakers. since the summer of 2005, the economy has absorbed a wide variety of shocks - major hurricanes, ongoing geopolitical tensions, and substantial increases in energy prices - and has adapted to a rise in short - term interest rates to more normal levels. yet real gross domestic product ( gdp ) increased a respectable 3 - 1 / 2 percent from the second quarter of 2005 to the second quarter of 2006, and the unemployment rate fell to 4 - 3 / 4 percent. at the same time, however, headline consumer price inflation has been quite high, and an upward movement in core inflation has raised concerns about the persistence in price pressures, a very worrisome development from the point of view of a monetary policy maker. the economic outlook for the next few years will be importantly shaped by ongoing responses to these developments. reflecting those responses, economic activity has slowed noticeably over the course of the year, and inflation, though down from its level earlier this year, remains uncomfortably elevated. however, i expect that the continuing adjustment will be relatively benign overall : the economy will grow at a moderate pace for a while, somewhat below the rate of increase of its potential, and then growth will begin to strengthen. in addition, as the cost pressures from the run - up in energy and materials prices begin to play out, or perhaps even partly reverse, and as pressures on resources ease slightly, i think we will likely see much lower headline inflation and a gradual diminution of core consumer price inflation. i know that to some this story of a soft landing seems too good to be true - the triumph of hope over experience. one question is whether it is even feasible. can inflation pressures decrease with only a modest shortfall of economic growth from potential? and is it possible that a modest decline in resource utilization will not cumulate into something more serious, as it has tended to do in the past at least without a major adjustment of policy? my view is that this economy is capable of generating the type of favorable outcome that i have just sketched, but, as in any period of transition,