decisions without fear of direct political interference. it does not mean – nor should it – that the central bank is not accountable for its policies. it is important to remember that the federal reserve does not select its own goals. instead, congress sets the goals it wants the fed to pursue with monetary policy. since 1978, congress has mandated that the fomc “ shall maintain long run growth of the monetary and credit aggregates commensurate with the economy ’ s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long - term interest rates. ” the goals of monetary policy are rightly a subject of legitimate debate. i have frequently argued that these goals are too broad, and they risk making the fed responsible for more than it can actually deliver. that, from my perspective, risks undermining the fed ’ s credibility and invites policymakers to lurch from one goal to the next when it seems convenient, thus making it more susceptible to political pressure. as a consequence, i have favored a single mandate for the fed – price stability – to increase the clarity of the objective and make it easier to hold the fed accountable. nevertheless, given a mandate, what central bank independence means is that congress has left the decisions of how best to achieve this mandate to fed policymakers. why did congress design the fed this way? there are two very important reasons. first, monetary policy affects the economy with sometimes long and variable lags, but elected politicians, and even the public, often make decisions with the next month, next quarter, or the next election in mind. monetary policy actions taken today will often not have their full effect on the economy for at least several quarters and perhaps as long as several years. that is why monetary policy choices today must focus on the intermediate to long term and anticipate what the economy might look like over the next one to three years. indeed, the mandate itself stresses the long run focus of monetary policy. moreover, there can be a conflict between what monetary policy may be able to achieve over the short term versus its impact over the long term. for example, in the short term, it might seem expedient or even desirable to try to spur economic growth and employment by conducting excessively accommodative monetary policy. yet, this could lead to very bad economic outcomes in the long term, including higher inflation, higher interest rates, and an eventual tightening of policy to control inflation that

brief them on regional and national economic conditions and provide support and insight on appropriate monetary policy. the independent presidents and their research departments also help ensure that a wide variety of perspectives are brought to the table when we make policy. this helps prevent monetary policy from adopting a “ groupthink ” mentality. the separate teams of research economists in the reserve banks also ensure a useful diversity in academic pursuit. research teams at the banks have advanced many economic concepts that have been adopted by the federal reserve system, such as the value of inflation targeting or the latest use of economic modeling. this has led to centers of excellence in the districts, such as the payment cards center and the real - time data research center here in philadelphia. in addition to economic research, the reserve bank presidents also gather information from their boards of directors and advisory councils and through conversations with local and international business leaders. all this helps to contribute to a rich and comprehensive mosaic of the national economy. monetary policymaking is conducted by committee by design, and divergent views can and often do exist. as we worked our way through the financial crisis and through the recovery, we found ourselves in uncharted territory dealing with many economic challenges. so, there is little wonder why there are often differences of opinion around the table. some commentators express the view that dissent causes dissonance and therefore confuses the communications. i disagree. i believe that open dialogue and diversity of views lead to better bis central bankers ’ speeches policy decisions and are the primary means by which new ideas are gradually incorporated into our monetary policy framework. thus, i believe diversity of thought is a sign of a thoughtful process. i have often quoted the famous american journalist walter lippmann, who said, “ where all men think alike, no one thinks very much. ” i think it is healthy for the american public to know that we debate some of the same issues that those outside the fed debate. hiding such debate behind a unanimous vote does nothing to promote true transparency. by being open and transparent about these various perspectives, our decentralized model for the federal reserve helps strengthen public confidence and preserve its independence. defending central bank independence so, why is central bank independence so important? it strikes many people as odd that in a democratic society we leave monetary policy decisions in the hands of nonelected policymakers who can act with independence. i think this view stems from confusion about what is really meant by central bank independence. central bank independence means that the central bank can make monetary policy