the committee has explicitly translated the first goal into a 2 percent target for personal consumption expenditure, or pce, inflation. this is a measure of inflation that includes all goods and services, including those related to food and energy. the committee ’ s second goal – maximum employment – is less rigid, because long - run employment is influenced by many variables outside the control of monetary policy. however, most fomc participants project that, over the longer run, unemployment will be between 5 percent and 6 percent if monetary policy keeps inflation close to 2 percent. it is useful to examine the recent evolution of the economy in light of these two objectives. first, i will show you data on the unemployment rate over the past 30 years or so. you can see that the unemployment rate peaked at 10 percent after the great recession. it has fallen disturbingly slowly. indeed, you can see on this graph that the unemployment rate fell much more rapidly in 1983 and 1984 after peaking at over 10 percent. second, i will show you data on pce inflation. since the beginning of the great recession, pce inflation has averaged only 1. 5 percent – well under the fomc ’ s target of 2 percent. note too that pce inflation has trended downward since early 2012 and is currently running at close to 1 percent. bis central bankers ’ speeches these graphs show us the past, but what about the future? the fomc has said that, under its current monetary policy stance, it expects the unemployment rate to decline gradually to desirable levels. it has said too that it expects inflation to move back toward 2 percent over the medium term. by easing monetary policy relative to its current stance, the fomc could facilitate a more rapid fall in unemployment and more rapid return to 2 percent inflation. hence, the committee could do better with respect to both of its congressionally mandated objectives by adopting a more accommodative monetary policy stance. that concludes my formal remarks. thank you all once again for joining us here tonight, and now i look forward to fielding your questions. bis central bankers ’ speeches

have input into fomc deliberations. this basic federalist structure has a long history. in fact, this year is the centennial of the opening of the 12 reserve banks and the start of the work undertaken by the federal reserve system. it ’ s been a fascinating hundred years, with many twists and turns along the way. i ’ m sure that many of you have questions about that journey. the answers to all of your questions – and probably more – are on a website that the fed has created at federalreservehistory. org. i encourage you to visit this site to learn more about the people, places and events that have shaped federal reserve history. i won ’ t say too much more about fed history – perhaps to the relief of some of you! – but i do want to draw your attention to one of the things that i think has changed the most over the federal reserve ’ s history : our communication with the public. a hundred years ago, congress created a system that was designed specifically so that the residents of main street would have a voice in monetary policy. technology has changed a lot since 1914 – i ’ m told that they didn ’ t even have smartphones back then – and so the ways that we gather bis central bankers ’ speeches information from main street have changed. but this fact - finding is still an important part of the making of monetary policy. indeed, tomorrow, i will meet with upper peninsula business leaders to gather exactly this kind of information. communication is a two - way street, however. during the past century, the federal reserve ’ s communications to the public about its monetary policy actions have also evolved greatly. the pace of change was especially rapid in the eight years under chairman bernanke ’ s leadership. so, as the federal reserve system plans for its second century, i would say that the importance of two - way communication is a key lesson from the system ’ s first century. in order for the fed to continue to be effective, it needs to communicate its policy decisions transparently to the public. conversely, it also needs the public ’ s input on how those policies are affecting them. events like the one today, and my meeting with business leaders tomorrow, are a key part of fostering that two - way communication. with that background in mind, let me turn back to the fomc and the making of monetary policy. i mentioned that the fomc meets eight times per year. at those meetings, we decide