exercise altogether. having evoked dr. seuss earlier, i can imagine his bidding the dots farewell with some ditty like this : “ standard deviation of the dots in the dot chart, ” by torsten slok, deutsche bank research, april 23, 2014. bis central bankers ’ speeches yet expressing the fomc participants ’ perceptions of, and possible reactions to, an assortment of future scenarios – however often the committee ’ s composition may change – does strike me as having some merit, if only to give markets insight into how the central bank might react under different circumstances. in the parlance of the trade, this is called “ state - based ” guidance. yet here, too, we have struggled. for example, until two meetings ago, we used an unemployment figure of 6½ percent as a point sometime after which we would begin to consider pulling back on monetary accommodation, then decided this wasn ’ t quite the ticket. this may be a little more inside baseball than you expected to hear today, but here ’ s the point : expect the fed to continue refining its communications. we are getting better at it. but to invoke the immortal words from the chain gang captain portrayed by strother martin in the 1967 movie cool hand luke : “ what we ’ ve got here is failure to communicate. ” we are working on it so that you and other bankers, market operators, businesses and consumers will develop the best possible insight into how your monetary authority will behave. i expect that our new chair, janet yellen, will play a significant role here as she uses her press conferences to explain what simply cannot be communicated with a series of dots or within the statement we release after each meeting. alas, there is congress now mind you, your monetary authority – your federal reserve – does not hold every card to your future in its hand. no matter how clearly we communicate, no matter how expertly we tailor our supervision of your banks, no matter how we conduct monetary policy, our work is necessary but not sufficient to the success of the louisiana, texas and u. s. economies. the fiscal authorities – congress and the executive branch – must do their job to provide the proper tax, spending and regulatory incentives for businesses to take advantage of the cheap and abundant money the fed has made possible and put it to work to grow, expand their payrolls and let america truly prosper. i will spare you my thoughts on congress ( it is not very central banker - like to resort

he noted that president harry truman “ wanted a one - armed economist, not the usual sort that analyzes every problem with ‘ on the one hand, this, and on the other, that. ’ ” gross claimed that fed chair ( janet ) yellen, in her speech given recently at the fed ’ s jackson hole, wyo., conference, introduced so many qualifications about the status of the labor market that “ instead of the proverbial two - handed economist, she more resembled a hindu goddess with a half - dozen or more appendages. ” 2 whether you analyze the labor markets with one arm or two, or six or 19, the issue is how quickly we are approaching capacity utilization, so as to gauge price pressures. after all, a central bank is first and foremost charged with maintaining the purchasing power of its country ’ s currency. like most central banks around the world, we view a 2 percent inflation rate as a decent intermediate - term target. of late, the various inflation indexes have been beating around this mark. just this last friday, the personal consumption expenditure ( pce ) index for july was released, and it clocked in at a 1 percent annualized rate, a pace less than the run rate of april through june. does this mean we are experiencing an inflation rate that is less than acceptable? i wonder. at the dallas fed, we calculate a trimmed mean inflation rate for personal consumption expenditures to get what we think is the best sense of the underlying inflation rate for the normal consumer. this means we trim out the most volatile price movements in the consumer basket to achieve the best sense we can of underlying price stability. in the july statistics, we saw some of the fastest rates of increases in a while for the largest, leastvolatile components of core services, such as rent and purchased meals. 3 so the jury is out as to whether we have seen a reversal in the recent upward ascent of prices toward our 2 percent target. as to achieving “ moderate interest rates ”, the dashboard shows that we have overshot the mark. interest rates on the lowest - quality credits – on “ junk ” – are historically low, as are the spreads they are priced at above the current historically low nominal rates for investmentgrade credits. i have been involved with the credit markets since 1975. i have never seen such ebullient credit markets. the 30 - year treasury yield is trading at a hair over 3 percent. if ambassador jaishankar and i