from futures markets, and consequently the forecasts of aggregate price inflation, as highly uncertain. these considerations raise several questions for researchers : first, is it possible to improve our forecasts of commodity prices, using information from futures markets but possibly other information as well? for example, the markets for longer - dated futures contracts are often quite illiquid, suggesting that the associated futures prices may not effectively aggregate all available information. second, what are the implications for the conduct of monetary policy of the high degree of uncertainty that attends forecasts of commodity prices? although theoretical analyses often focus on the case in which policymakers care only about expected economic outcomes and not the uncertainty surrounding those outcomes, in practice policymakers are concerned about the risks to their projections as well as the projections themselves. how should those concerns affect the setting of policy in this context? whatever the forecasting value of futures market quotes, these and other financial market prices provide limited information about the structural relationships between commodity prices and their determinants. absent a specification of those structural relationships, one cannot analyze the effects of alternative monetary policies or the implications of other shocks to the economy. empirical work on inflation, including much of the classic work on phillips curves, has generally treated changes in commodity prices as an exogenous influence on the inflation process, driven by market - specific factors such as weather conditions or geopolitical developments. by contrast, some analysts emphasize the endogeneity of commodity prices to broad macroeconomic and monetary developments such as expected growth, expected inflation, interest rates, and currency movements. of course, in reality, commodity prices are influenced by both market - specific and aggregate factors. market - specific influences are evident in the significant differences in price behavior across individual commodities, which often can be traced to idiosyncratic supply and demand factors. aggregate influences are suggested by the fact that the prices of several major classes of commodities, including energy, metals, and grains, have all shown broad - based gains in recent years. in particular, it seems clear that commodity prices have been importantly influenced by secular global trends affecting the conditions of demand and supply for raw materials. we have seen rapid growth in the worldwide demand for raw materials, which in turn is largely the result of sustained global growth – particularly resources - intensive growth in emerging market economies. 1 and factors including inadequate investment, long lags in the development of new capacity, and underlying resource constraints have caused the supplies of a number of important commodity classes, including energy and metals,

jerome h powell : confirmation hearing testimony by mr jerome h powell, member of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 28 november 2017. * * * chairman crapo, ranking member brown, and other members of the committee, thank you for expeditiously scheduling this hearing and providing me the opportunity to appear before you today. i would also like to express my gratitude to president trump for the confidence he has shown by nominating me to serve as chairman of the board of governors of the federal reserve system. the federal reserve has had a productive relationship with this committee over the years, and, if you and your colleagues see fit to confirm me, i look forward to working closely with you in the years ahead. before i continue, i would like to introduce my wife, elissa, who is sitting behind me. i would not be here today without her unstinting love, support, and wise counsel. as you know, i have served as a member of the board of governors and the federal open market committee ( fomc ) for more than five years, contributing in a variety of capacities, including most recently as chairman of the board ’ s committee on supervision and regulation. my views on a wide range of monetary policy and regulatory issues are on the public record in speeches and testimonies during my service at the fed. the congress established the federal reserve more than a century ago to provide a safer and more flexible monetary and financial system. and, almost exactly 40 years ago, it assigned us monetary policy goals : maximum employment, meaning people who want to work either have a job or are likely to find one fairly quickly ; and price stability, meaning inflation is low and stable enough that it need not figure into households ’ and businesses ’ economic decisions. i have had the great privilege of serving under chairman bernanke and chair yellen, and, like them, i will do everything in my power to achieve those goals while preserving the federal reserve ’ s independent and nonpartisan status that is so vital to their pursuit. in our democracy, transparency and accountability must accompany that independence. we are transparent and accountable in many ways. among them, we affirm our numerical inflation objective annually and publish our economic and interest rate projections quarterly. and, since 2011, the chairman has conducted regular news conferences to explain the fomc ’ s thinking. additionally, we are accountable to the people ’