and financial environment almost certainly enhances the capacity of monetary policy to fight occasions of cyclical weakness in the economy. a central bank ’ s commitment to price stability over the longer term does not mean that monetary policy can ignore the short - term impact of economic events. it is important to recognize that, even when an economy is set on the path to price stability, and price expectations are contained, it does not necessarily mean that all potential sources of inflationary shocks have been eliminated. moreover, while there is no long - run trade - off between unemployment, or output, and inflation, both formal evidence and common sense observation on wage and price rigidities attest to the existence of such a trade - off in the short run. in the long run, however, monetary policy ’ s impact is only on inflation ; potential output primarily is determined by advances in technology, growth in human and physical capital and other real resources. because of the uncertainty about the timing and significance of short - term monetary policy effects on economic activity, as well as all other uncertainties concerning the economy, there are always differences of view about the speed with which policy should be adjusted, and on the balance of risks in dealing with ongoing economic developments. these conflicts become more marked when an economy confronts supply shocks that drive up prices sharply and suddenly - - such as the two oil shocks of the 1970s. in those circumstances, from my perspective, the appropriate course, consistent with maintaining longer term price stability, should be to bring inflation down somewhat gradually, as the economy adjusts to the shift in relative prices. as i see it, monetary policy must be formulated cautiously, and cannot ignore business cycle developments. in establishing price stability as the primary goal of monetary policy, therefore, it is best to recognize that monetary policy does affect output in the short run. a central bank can appropriately be assigned the task of promoting sustainable economic growth, while maintaining long - term price stability and ensuring the health of the financial system. this way of articulating policy goals has the advantage of meeting the public ’ s need to understand the basis for monetary policy decisions, and may help, therefore, to enhance the democratic accountability of monetary policy. once monetary policy is firmly committed to price stability, how can a central bank best reach that goal? clearly, at an operational level, no single formula or implementation strategy can be expected to succeed in all countries and under all circumstances ; possible approaches can take many different forms. the choices depend on a country ’ s history

, business closures, and job losses created tremendous hardships for many americans, and was especially devastating for communities of color. we know that people of color, and black people in particular, experienced higher rates of illness and death. 1 significant representation in essential services work — jobs that required close contact with others — contributed in part to these tragic outcomes. 2 over the past 18 months, we learned how these issues played out for families through regular conversations with community leaders in our district and beyond. separately, our research shone a spotlight on many of these painful realities. for example, a team of new york fed economists published a series earlier this year aimed at understanding the gap in covid - 19 intensity by race and by income. 3 and last month, they shared their findings around racial differences in icu stress during the third wave of covid - 19. 4 1 / 2 bis central bankers'speeches there ’ s no single or simple solution that can fully address these problems. but, as a nation we can build a stronger foundation so that everyone can fulfill their economic potential, thus better enabling the federal reserve to fulfill its mandate. that ’ s why at the new york fed — and across the federal reserve system — a key area of focus is to better understand economic drivers of health and wellbeing, and to champion promising solutions. we are able to do this in large part through our community development efforts to better understand the needs and issues of low - and moderate - income communities throughout our district. our community development team recently adopted a new strategy to concentrate on three key areas : health, household income, and climate. 5 our aim is to connect people, programs, and proposals — especially those focused on fostering racial equity — with the funding needed to promote equitable growth and tackle economic inequality. we are already doing important work in this space and there is so much planned for the future. a few months ago, we brought together mental health and policy experts to examine the pandemic ’ s impact on mental health in communities of color, including the correlation between depression, anxiety, and economic factors such as lost income. 6 and next week, we ’ ll be hosting an event in collaboration with new york university ’ s rory meyers college of nursing, the new york city department of health and mental hygiene, the low income investment fund, and the robert wood johnson foundation to discuss the need for investments in maternal and child health. 7 our goal for convening this coalition of thought and civic