shown that sustained see, for example, the discussions in lars e. o. svensson ( 1999 ), “ inflation targeting as a monetary policy rule, ” journal of monetary economics, vol. 43 ( june ), pp. 607 – 54 ; and in jon faust and dale w. henderson ( 2004 ), “ is inflation targeting best - practice monetary policy? ” federal reserve bank of st. louis review, vol. 86 ( july / august ), pp 117 – 44. see board of governors, “ fomc statement of longer - run goals and policy strategy, ” in note 3. due to well - known upward biases in the pce and other indexes of consumer prices as measures of the cost of living, zero inflation, properly measured, corresponds to a positive measured level of pce inflation, most likely on the order of 1 / 2 percent. bis central bankers ’ speeches periods of even mild deflation can impose immense costs in terms of slow growth and high unemployment. 14 thus, balancing the goal of maximum employment against the costs of modest inflation, the committee chose 2 percent measured inflation as the value it judged likely to provide an adequate buffer against costly deflations while keeping the costs of inflation quite small. given that the rate of inflation over the longer run is determined solely by monetary policy, central banks can, and indeed must, determine the long - run level of inflation. in contrast, they cannot do much to affect the maximum sustainable level of employment. that level is determined by factors affecting the structure and dynamics of the labor market that are almost completely outside the control of the central bank. nonetheless, the committee felt strongly that it should provide some quantitative interpretation of economic conditions consistent with the maximum employment portion of the fed ’ s mandate. failure to do so might be seen as elevating the inflation side of the dual mandate above the employment side. the committee chose to couch the longer - run employment objective in terms of the rate of unemployment while indicating that other indicators may also be relevant in assessing the maximum level of employment. unfortunately, there is a considerable range of disagreement in the economics profession and on the fomc itself about what this longer - run normal rate of unemployment is. moreover, there is widespread recognition that whatever the normal rate might be today, it can change over time. so the consensus statement notes that, as of january 2012, fomc participants ’ estimates of this rate had a central tendency of 5. 2 percent to 6. 0

arrangement counterparts, to help them to cope with financial crises. second, the financial inclusion policy implemented around the world since the global financial crisis, and the support program for credit loan and support program for smallscale business owners, being carried out as parts of our bank intermediated lending support facilities, share the same goal, while the support program for trade financing and support program for high tech start - ups, for smes, are being used as credit policy tools. since the financial crisis there may be a risk of deterioration of the income distribution structure, which will ultimately affect economic stability, and it is therefore time for central banks to play a certain role in this regard. third, while carrying out its responsibility of promoting financial stability, the bank of korea has been strengthening its role of representing the national interest in the formulation of international norms. particularly, as long - and short - term liquidity regulations must be established during the course of finalizing basel iii over the next five years, which will greatly affect korea ’ s financial industry, we plan to participate more actively in this process. fourth, at the initiative of our regional branches, regular publication of the 「 golden book 」 has been launched, drawing much attention. the golden book project was carried out in the hope that the bok ’ s policy experiences will serve as triggers for regional economic development. while on the one hand striving to convey information on regional economic activities promptly, we also want the book to contribute to the formulation of regional economic development strategies, by providing in - depth analyses of a wide range of pressing issues in each region. at the initial stage of the project we consulted other central banks ’ reports such as the us fed ’ s 「 beige book 」, long well - known worldwide. we can, however, fairly say that we are blazing a new trail now, and that will before long bring the “ golden book ” international recognition as an unique bank of korea report. alongside the central bank ’ s conduct of monetary and credit policies, this is yet another unique way in which, given its 16 local branches, it can contribute to the national economy. in the course of overcoming the global financial crisis, the korean economy ’ s reliance on exports has intensified further still. the challenge facing us is to achieve growth based upon a balance between exports and domestic demand. in other words, we should focus on policies that further promote domestic consumption and investment. while maintaining price and financial stability, it is also desirable that monetary and credit policies be conducted