##bly pegged and publish its available reserves on a regular basis. the simplicity of the goal facilitates communication and provides a single focus for policy. however, in a regime with multiple objectives, central bank officials must try to be transparent with respect to more than one objective. in short, as others have noted, more - complicated mandates require more - intricate communication. in that case, clearly summarizing a balancing of the goals would be more difficult in a short announcement, requiring as well other vehicles for describing the basis for policy moves, such as the fomc minutes and the semi - annual report on monetary policy. recent specific suggestions about central bank transparency i would now like to turn to some recent specific recommendations for improved transparency, in some cases with respect to the federal reserve system. these include the quantification of the central bank ’ s objectives, the publication of forecasts, and the earlier release of minutes. first, a central bank, the argument goes, should adopt and explicitly reveal numerical goals for its objectives in order to facilitate holding the monetary authority accountable, to reduce uncertainty, and to anchor private expectations about such things as inflation trends and monetary policy decisions. for example, many countries in recent years have set a single quantitative inflation goal. but, in my view, this approach has potential drawbacks. as i have noted on previous occasions, even in the case of a single inflation goal, the selection of a particular price index to guide policy is difficult, and the appropriate index and inflation value might change over time as the structure of the economy evolves and the pace and nature of technological advances vary. inflation targets also present problems in the presence of supply shocks, such as large increases in oil prices, that may simultaneously increase the price level and decrease aggregate output. most inflation - targeting central banks attempt to gain flexibility in such cases by focusing on core inflation, by having relatively wide target ranges, by stipulating “ escape clauses ” that allow inflation to diverge from the target for a while, or by aiming at inflation well in the future or at an average rate over the business cycle and thus allowing enough time for the effect of such shocks to have died down. despite such elements of flexibility, an inflation - targeting regime may still not typically attend sufficiently to output variation or financial stability. furthermore, these elements of flexibility may not foster the credibility of the central bank any better than a system of multiple objectives. the longer the policy timeframe and the wider the band for an inflation - targeting regime

be crucial to understanding whether elevated rates of inflation last and if that will trigger a lasting effect on the u. s. economy. we will know more as time goes on about whether inflation in the prices of those goods and services will level off or even fall, as lumber prices have, and how other prices will evolve. but, importantly, we will also know whether this period of higher inflation has started to affect expectations of future inflation. a critical aspect of our new framework is to allow inflation to run above our 2 percent target ( so that it averages 2 percent ), but we should do this only if inflation expectations are consistent with our 2 percent target. if inflation expectations become unanchored, the credibility of our inflation target is at risk, and we likely would need to take action to re - anchor expectations at our 2 percent target. this raises a couple of key questions : whose inflation expectations do we examine, and how do we determine if they are unanchored? with regard to the first question, we measure inflation expectations two ways. first, we survey the public and ask them what they expect the inflation rate to be in coming years. the university of michigan household survey and the new york fed ’ s survey of consumer expectations are examples of this “ survey approach. ” second, we can infer inflation expectations from differences in yields between treasury securities that are indexed for inflation and those that are not. these breakeven inflation measures from the treasury inflationprotected securities market are referred to as “ market based ” measures of inflation compensation. survey measures give us an idea of what the average household expects inflation to be in the coming years. presumably, this measure of expectations is important because it should influence households ’ wage demands as they seek compensation for an increasing cost of living. a key drawback of these measures is that the respondent incurs no benefit or cost from the accuracy of their forecast. this is why i have always preferred market - based measures of inflation expectations, because they are formed by investors who are betting with real money about future inflation. in short, they have skin in the game. this brings us to another question : are inflation expectations anchored around our inflation target 3 / 6 bis central bankers'speeches of 2 percent? survey measures have shown a dramatic increase in inflation expectations over the past few months. the recent new york fed measure has short - and medium - term inflation expectations at 5. 3 percent and 4. 2 percent, respectively. this is eye opening and a