ask again, what is the accountability test? much has been done ; however, looking at the bull ’ s - eye scorecard, i would argue, if anything, the fomc has been less aggressive than the policy loss function calls for. and to me, in the current circumstances, accountability and optimal policy mean we should be maintaining a large degree of accommodation for some time. policies that would instead place us on a slow glide path toward our targets undermine the credibility of our claim that we will do our job and meet mandated policy goals in a timely fashion. timid policies would also increase the risk of progress being stymied along the way by adverse shocks that might hit before policy gaps are closed. the surest and quickest way to reach our objectives is to be aggressive. this means, too, that we must be willing to overshoot our targets in a manageable fashion. such risks are optimal if the outcome of our policy actions implies smaller average deviations from our targets over the medium term. we should be willing to undertake such policies and clearly communicate our willingness to do so. references board of governors of the federal reserve system, 2013, “ what are the federal reserve ’ s large - scale asset purchases?, ” ( external ) current faqs, december 19. federal open market committee, 2014a, press release ( external ), march 19. federal open market committee, 2014b, transcript ( external - pdf ) of janet yellen press conference, march 19. federal open market committee, 2014c, “ statement on longer - run goals and monetary policy strategy, ” ( external - pdf ) as amended january 28. evans, charles l., and jonas d. m. fisher, 2011, “ what are the implications of rising commodity prices for inflation and monetary policy?, ” ( pdf ) chicago fed letter, federal reserve bank of chicago, no. 286, may. friedman, milton, and anna j. schwartz, 1963, a monetary history of the united states, 1867 – 1960, princeton, nj : princeton university press. krugman, paul, 2013, “ secular stagnation, coalmines, bubbles summers, ” ( external ) new york times, opinion pages, november 16. and larry summers, lawrence, 2013, speech ( external ), fourteenth annual research conference in honor of stanley fischer, international monetary fund, washington, dc, november 8. taylor, john b., 2013, “ a review of recent monetary policy,

we have to ask ourselves if this gap is a good measure of the current degree of slack in the labor market. for example, some of the decline in the unemployment rate over the past four years reflects people dropping out of the labor force instead of finding jobs. of course, certain demographic factors such as the increasing number of baby boomers reaching retirement age mean we should have expected to see a substantial drop in labor force participation for reasons unrelated to cyclical job prospects and the health of the labor market. but, when you take a detailed look, it appears that the labor force participation rate has recently declined more than can be accounted for by demographic trends and other such structural factors alone. in addition, the end of extended unemployment insurance benefits and other factors likely have decreased the natural rate of unemployment that is our target. so, the decline in the unemployment rate likely overstates to some degree the reduction of slack in the labor market over the past year. this discussion illustrates how difficult it is to judge where the labor market stands relative to our full employment mandate. a while back, this wasn ’ t such a critical issue : when the unemployment rate stood at 9 or 10 percent, it obviously far exceeded the natural rate of unemployment. now, as the unemployment rate falls closer to its natural rate, disentangling structural from cyclical changes becomes more important. thus, at this juncture, it is prudent to consider a wide range of indicators of labor market activity to better gauge the overall health of the labor market. in the press conference following the march fomc meeting, chair janet yellen indicated that, in addition to focusing on the official unemployment rate, the committee considers a wide range of data in assessing labor market conditions. 4 these include quit rates, layoffs and a variety of wage measures, as well as broader measures of unemployment that include discouraged workers and those who would like to work more hours. 5 generally, the evidence points to a still weak labor market. we still have some ways to go to reach our employment mandate. below target on 2 percent inflation goal, too let ’ s now turn to our price stability mandate. no one can doubt that we are undershooting our 2 percent target. total pce prices rose just 0. 9 percent over the past 12 months ; that is a substantial and serious miss. and, as the bull ’ s - eye chart shows, this undershooting has persisted for several years. compounding these difficulties, below - target inflation