roger w ferguson, jr : the new england economic adventure remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the opening of the new england economic adventure at the federal reserve bank of boston, boston, 8 october 2003. * * * it is a pleasure to participate in the opening of the new england economic adventure at the federal reserve bank of boston. the educational possibilities presented by the adventure are truly exciting. the federal reserve system has a long history of involvement in economic education. an understanding of economic principles, especially the workings of markets, is fundamental to good decisionmaking - whether by workers, or employers, or public policymakers. i also confess to some self - interest in this regard. a better understanding of economics by the public makes the task of the federal reserve system easier. people may disagree with our policies - some may have different objectives and others may think different approaches to achieving those objectives would be more effective - but at least we are speaking the same language. they know what we are trying to do, and they know why. historically, much of our education effort has focused on increasing public understanding of the federal reserve system itself : how we are structured, the nature and scope of our mission, the monetary policy and supervisory tools at our disposal. providing information about the fed remains a key part of our programs. for the past ten or so years, we have been running the fed challenge, a competition in which teams of high school students engage in mock federal open market committee discussions and make recommendations regarding monetary policy. the quality of the analysis and the sophistication of the presentations have been impressive. by comparison, our own fomc deliberations seem a little dry ; for example, we on the fomc tend to be a little more low tech than the students, who come armed with very colorful computer - driven graphics to support their analysis and arguments. but teaching general economic principles has also been a recurring theme. a number of federal reserve banks work closely with the national council on economic education ( ncee ), which has a host of fascinating programs that make teaching and learning economics fun. gary stern, the president of the federal reserve bank of minneapolis, currently chairs the ncee, and i was privileged to address that group in may, 2002. in recent years, the federal reserve has increased its attention to financial literacy, an area that might be seen as the more practical, personal side of economic education.

, productivity growth has picked up in the past year. increased productivity is, in part, likely coming from components that will continue to yield improvements, such as the integration of new technology, new ways of working, and the large increases in new business formation. growth in new businesses has been found to lead to productivity gains, likely because new entrants innovate, and legacy firms must also innovate to compete with new entrants. these increases in productivity are also consistent with real wage gains, one measure of rising living standards. - 4the net result of all this healing of the economy is that growth has been robust even as upward pressure on inflation has diminished. this healing has been helping both sides of our dual mandate over the past year. monetary policy has been essential in this process. higher interest rates have helped to restrain demand, giving supply the opportunity to catch up. monetary policy has also anchored inflation expectations. longer - term inflation expectations have stayed anchored, and shorter - term expectations have fallen. the federal open market committee ’ s ( fomc ) preferred inflation gauge has fallen from a peak of 7. 1 percent in june 2022 to 2. 6 percent in december 2023. we have made this progress while unemployment has remained near a 50 - year low. as central bankers, we always need to consider the full range of risks to achieving both our goals. we are always assessing risks on the horizon, including the risk of an economic slowdown that could reduce employment, or the risk that inflation does not stay on its path of sustainably returning to 2 percent. as chair powell indicated in his most recent press conference, my fomc colleagues and i are confident we are on a path to 2 percent inflation, but we need to see continued good data before we can begin the process of reducing the federal funds rate. i fully support what he called a careful approach to considering policy normalization given current conditions. january ’ s report on consumer product index inflation is a reminder that the path back to 2 percent inflation may be a bumpy one. given the limited historical experience with the growth and inflation dynamics we currently face, and no modern experience of emerging from a global pandemic, we have yet another reason to proceed carefully, as we have been doing. - 5banking conditions next, i want to turn to current banking conditions, lessons learned from the march 2023 banking stress in terms of liquidity risk management, and how we can put those lessons to use