side to the past 17 months is not easy, but the crisis has given us a unique opportunity to see the big picture and consider our place in it. this is a historical inflection point, and this generation of students is in a position to turn its lessons into profound tools of change. and i hope some of you will use those tools in public service. the students here today are the policymakers and legislators of the future. your teachers are the ones with the daunting task of preparing you for that future. you will see the world differently than your predecessors. you have been forced, sooner than most people, to consider what in life is truly important. you have seen a world upended, but you have also seen a world that is rapidly changing — sometimes more in one week than some of us have experienced over the course of decades. i hope this will cause you to think about how you want to make your mark, knowing that things do change, and sometimes they change quickly. this is an extraordinary time, and i believe that it will result in an extraordinary generation. as long 1 / 2 bis central bankers'speeches as we continue to have extraordinary educators to guide them there. education is the foundation of our economy, indeed, of our society. teachers have always been tasked with nurturing and overseeing our most valuable national resource. it is the highest call within the higher calling of public service. i want to thank all of the teachers — those here today and the rest across the country — as well as the parents and students who have come together to make it through the past year and a half. thank you, and i look forward to your questions. 2 / 2 bis central bankers'speeches

acknowledging there are arguments in both directions. this brings me back to the question : is inflation targeting still appropriate? the short answer is yes, but it is important to be clear what this means in practice. inflation targeting can mean different things to different people. it comes in different shapes and sizes. some versions require a central bank to focus on inflation alone and set monetary policy so that the forecast rate of inflation is equal to the target. but inflation targeting does not need to be rigid like this. in my view, an inflation targeting regime should consist of the following four elements. 1. the inflation target should establish a clear and credible medium - term nominal anchor for the economy. a high degree of uncertainty about future inflation hurts both investment and jobs. the economy works best if there is a degree of predictability. most people can cope with some variation in the inflation rate from year to year. but dealing with uncertainty about what inflation is likely to average over the medium term is more difficult. inflation targeting plays an important role in reducing that uncertainty by providing a strong nominal anchor. 2. the inflation target should be nested within the broader objective of welfare maximisation. it is worth remembering that inflation control is not the ultimate objective. rather, it is a means to an end. and that end is the welfare of the society that we serve. i sometimes feel that as some central banks sought to establish their credentials as inflation fighters they overemphasised the importance of short - run inflation outcomes. and this has been difficult to walk back from. some central banks have been concerned that if they gave weight to other considerations, the community might doubt their commitment to inflation control. so, it became all about inflation. but central banks have a broader task than just controlling inflation in a narrow range. they play an important role in preserving macroeconomic stability and thus the steady creation of jobs. also, their decisions affect borrowing and asset prices and thus financial stability too. central banks have to determine how to balance these considerations when making monetary policy decisions. this means it makes sense for inflation targeting to be embedded within the broader objective of maximising the welfare of society. 3. the inflation target should have a degree of flexibility. this is not to say that the target itself should be flexible ; this would diminish its usefulness in providing a medium - term anchor. rather, some variation in inflation from year to year is acceptable and indeed unavoidable. how much variation is too much is difficult to know