2012. bis central bankers ’ speeches the most important announcement which leads me to what i consider the third and most important announcement we made last week : the statement of our longer - range goals and strategy. for the first time, the entire 17 - member committee stated that, given inflation over the longer term is primarily determined by monetary policy, we are able to specify that an inflation rate of 2 percent, as measured by the index for personal consumption expenditures, is most consistent with our mandate. at the same time, we stated that we cannot specify an exact goal for employment because “ the maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market ” and that “ change over time and may not be directly measurable. ” 7 ] in the aviary of monetary policy makers, i am considered a “ hawk. ” i respect the fact that the congress of the united states has given the federal reserve a dual mandate of conducting monetary policy so as to have full employment and simultaneously maintain stable prices. i believe monetary policy is the principal determinant of long - term price stability. but i have long maintained that monetary policy is but one gear in the complicated gearbox that drives job creation. education and other structural aspects of our economy condition the nation ’ s job - creating capacity ; fiscal and regulatory policy, in turn, condition both the structure and dynamics of employment. i was delighted that the full committee recognized this and made it part of its official credo. in a world driven by rapid technological change and globalization, job - creating capital will flow not only to countries that conduct sound monetary policy but to places with the most welcoming, competitive tax and regulatory systems. this was underscored in a recent harvard business school ( hbs ) survey authored by jan rivkin and michael porter, two widely admired scholars on national competitiveness and economic development. their survey of hbs alumni found that the greatest impediments to investing in and creating jobs in the u. s. are our current tax code and regulatory burden and uncertainty, as well as lagging workforce skills. absent changes on these fronts, the rivkin / porter study found that more than 70 percent of respondents expect u. s. competitiveness to decline over the next three years, and along with it, job - creating investment. 8 thus for me, explicitly acknowledging that monetary policy ’ s impact on employment is transitory and uncertain is a cardinal event. it signals to the markets

be cited. but this does not alter the fact that, as i said earlier, the foundation has been precarious in many areas and the medium term will have a decisive significance for the outcome. uncertainties abound and many households in iceland thread a narrow path of debt and wages, where if they lose their footing, the fall could be heavy. thus caution, steadfastness and self - control are called for in all areas of the economy – in other words, the maxim that “ the doors of pleasure should not be thrown wide open ” still applies. as far as the central bank is concerned, ensuring low inflation is its most important function today and in the future. and that picture is growing brighter, although care still needs to be exercised.