mandates for the ecb and the bank of england? under hierarchical mandates, price stability or low inflation is typically the principal objective, and other objectives can be pursued only once the inflation objective is met. second, there could be different strategies for achieving a given set of objectives. of course, the most important factor in determining monetary policy strategy is likely the nature of the objectives themselves, so any differences in strategy may be related to the first question. at any rate, is a taylor - rule type of approach – well aligned with a dual mandate and therefore a simple representation of the u. s. policy response – different in practice from the flexible inflation - targeting strategy of the bank of england and the two - pillar strategy of the ecb? if so, what are the consequences of the differences in strategy for how central banks respond to unexpected developments? third, what determines how effective a central bank is in meeting its objectives, given its strategy? this takes us into the main subjects that this program will cover. to what extent does the process followed in making monetary policy shape the details and effectiveness of the outcomes? does the nature of the governance and decision process matter? for example, does it matter whether there is a single governor or a committee ; whether there are outsiders as well as insiders on the committee ; whether there is individual or collective responsibility for the decisions of the committee ; and whether the committee is made up only of centralized members or also includes regional representatives? does the effectiveness of policy depend on the central bank's skill in communicating the intent behind its policy and the future direction of policy and, therefore, on the transparency of the process itself? does the effectiveness of the policy depend on the instrument independence of the central banks as well as the overall relationship between the central bank and the rest of government? it is interesting to try to identify differences in practice among central banks. but is the more meaningful story a convergence in practice around the world? is there any real difference between a monetary policy executed under dual mandate and under flexible inflation targeting? if central bank practices are converging, is this due to a convergence in the economic environments or to greater acceptance of a common intellectual framework regarding what central banks can and should do as well as how those goals can be achieved? the politics of monetary policy well i have finally reached my assigned topic – the politics of monetary policy. i use the term to describe the relationship between the central bank and the rest of government. in an earlier paper on this subject,

interest rate decision suggest that the labor market has continued to improve. although job gains slowed some last month, over the most recent three months payrolls have increased 230, 000 jobs per month on average, as the unemployment rate declined. moreover, the spending indicators that we have in hand for january point to a pickup in economic growth this quarter. further, the 12 - month change in average hourly earnings has moved up in recent months and stood at 2 - 1 / 2 percent in january. in addition, the rate of core consumer price index inflation over the past 12 months exceeded 2 percent, though this was not true of the core price index of personal consumption expenditures that the fed monitors closely. however – and there is frequently a “ however ” in our business – further declines in oil prices suggest that total inflation will likely remain low for somewhat longer than had been previously expected before moving back to 2 percent. in addition, global financial markets have been unusually volatile since the turn of the year. for instance, the s & p 500 volatility index ( vix ) rose markedly in early january, though it remains below the levels it reached in august of last year and in 2011, and it last week declined below its average value since the start of the year. the large movements in asset prices likely reflect increased concern about the global outlook, particularly ongoing developments in china and the effects of the declines in the prices of oil and other commodities on commodity - exporting nations. asset price declines may also reflect a reassessment of the prospects for growth in europe and japan, and perhaps also a recognition that u. s. gross domestic product and productivity growth have remained stubbornly low. if the recent financial market developments lead to a sustained tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the united states. but we have seen similar periods of volatility in recent years – including in the second half of 2011 – that have left little visible imprint on the economy, and it is still early to judge the ramifications of the increased market volatility of the first seven weeks of 2016. as chair yellen said in her testimony to the congress two weeks ago, while “ global financial developments could produce a slowing in the economy, i think we want to be careful not to jump to a premature conclusion about what is in store for the u. s. economy. ” of course, the fomc is closely monitoring global economic and financial developments and