certain proportion of those involved will succumb to the urge to subordinate ethics to the desire for personal gain, however fleeting. i believe that most of you will live up to the highest ethical standards. some of you will be able to profoundly influence your communities and businesses for the good. i will celebrate that kind of outcome, but my more modest hope is that as a group you will enter the business world as energetic advocates for the careful management of reputation risk and that throughout your careers you will use the lessons of our current experience. my final thought on managing the challenges ahead is one that will be familiar to you. as a person who was privileged, as you are, to attend some of the world's finest educational institutions, and as someone who currently serves in an institution that is heavily dependent on analysis, i know that knowledge matters. knowing a business plan or an issue or an analytical technique is an absolute requirement. recognizing that knowledge is fleeting is the beginning of deeper understanding. thus, my hope for you is a continuing commitment to working through difficult problems, a professional life characterized by the highest commitment to ethical behavior, a lifelong love of learning, and a few moments - days like today - for celebration of your success. congratulations and good luck. we are rooting for you.

long - term interest rates will be moderate. however, an environment of price stability is not one in which measured price indexes do not change. in fact, price indexes of consumer goods and services suffer from a variety of statistical biases that imply that the indexes overstate actual inflation. that is why, following federal reserve tradition, i speak of an environment of price stability, or a situation in which concerns about variations in the general price level do not materially influence the decisions of households and firms. in my view, we are in such an environment. the four - quarter growth in the core personal consumption deflator is currently running at a 1 - 1 / 2 percent rate, the slowest sustained pace in thirty years and 8 percentage points below its peak recorded in 1980. think of it : inflation has declined over the years - that is, we have experienced disinflation - to the point that increases in prices are now at a rate not seen on a sustained basis in the lifetimes of most of today's graduates. this disinflation represents an impressive victory for the disciplined monetary policy of the federal reserve under the guidance first of paul volcker and then alan greenspan. but having won the war, we at the federal reserve also have to win the peace. we will do that by always remembering that our mandate to foster price stability imposes a symmetric responsibility. because resources are misused whenever the economy operates outside the zone of price stability, measured inflation can be too low at times as well as too high. in the quarters ahead and as noted at the conclusion of our policy meeting earlier this month, the federal reserve has to guard against further declines from the already low prevailing level of inflation. and we shall be on guard against such a development. nonetheless, the possibility that the process of disinflation will cumulate to the point that price levels actually decline for a sustained stretch of time that is, we enter into deflation - remains quite remote. quite simply, the united states has too many good things going for it to make a forecast of deflation credible, including the stimulus imparted by prior monetary policy easings, the marked decline in oil prices associated with decisive victory in the war against iraq, the progress many households and firms have made in repairing their balance sheets, and the fact that inflation expectations remain well anchored. in discussing the fundamentals supporting economic expansion, i particularly want to single out the impressive growth of labor productivity. these increases in