see this, one need not look any further than the key research leadership positions around the federal reserve system. the research director in philadelphia is an economist with expertise in banking. the research director in chicago is an economist with expertise in labor economics and industrial organization. the research director in new york is an economist with expertise in payments systems. i ’ ve described a federal reserve system in which each reserve bank has a broad - based group of economists. some listeners might ask : why not put all the economists in washington? or why not have each bank specialize in a different subfield of economics? i have a couple of answers to these questions. the first is grounded in the nature of monetary policymaking at the federal reserve. the essence of the federal reserve system is that each of the 12 reserve bank presidents brings a distinct perspective to monetary policy deliberations. but these perspectives need to be appropriately informed by economic analysis – and, as i ’ ve argued, that kind of support requires a broad range of skills to be effective. second, i view geographic diversity as a necessary ingredient to generating valuable intellectual diversity across the system. back in the 1970s, the minneapolis fed research department played a key role in fostering the “ rational expectations revolution ” that has helped transform the making of monetary policy around the world. would these economists have played this same role had they been working in washington – or anywhere else in the system, for that matter? i believe that the answer to this question is no. the ideas in the research department were generated by synergistic interactions between minneapolis fed economists and university of minnesota economists – synergies that owed a lot to the geographical proximity between the two institutions. i see those same intellectual synergies as critical to the minneapolis fed ’ s, and the system ’ s, thinking as we move forward. let me sum up. bis central bankers ’ speeches most of you know that many economists work in reserve banks. what i wanted to communicate to you today is that these economists have many different fields of specialization. this diversity is essential – reserve banks need that large variety of skills to fulfill our public policy missions. as a result, many kinds of economists can enjoy successful careers within the federal reserve. what it takes to be successful in our organization as an economist is extraordinary dedication to, and belief in, our public policy mission. bis central bankers ’ speeches

to its two congressionally mandated objectives. we ’ ve seen that the fomc is undershooting its price stability objective, in that inflation is running well below the fomc ’ s goal of 2 percent and is expected to remain that low for several years. the undershooting is problematic because it suggests that the american economy is wasting available resources, especially its human resources. we ’ ve seen strong evidence of this underutilization in the performance of key labor market metrics. hence, the fomc is also underperforming with respect to its maximum employment objective. we need to do better as a committee – and i look forward to working with my colleagues to make that happen. thank you for listening. i ’ d be happy to take your questions. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches