generated by the net migration. however, property prices in the auckland market and elsewhere would be pushed further upwards. 3. policy targets agreement while the policy targets agreement ( pta ) for monetary policy is a relatively simple document, we continue to be surprised at the wide range of interpretations that we see in the media and in commentaries. i would like to take this opportunity to discuss : what the pta says ; the thinking behind the changes introduced in 2012 ; and how the reserve bank interprets the pta – particularly in relation to recent data on inflation outcomes, and in relation to monetary policy going forward. bis central bankers ’ speeches i ) what the 2012 pta says the pta has several important features, including : • a well - defined policy target to keep future cpi inflation outcomes between 1 percent and 3 percent on average over the medium term, with a focus on keeping future average inflation near the 2 percent target mid - point. • recognition that inflation might deviate from its trend for several reasons such as international commodity price movements, natural disasters and government tax and other policy measures that affect prices. • a requirement that the bank monitor asset prices, have regard to the efficiency and soundness of the financial system and seek to avoid unnecessary instability in output, interest rates and the exchange rate. ii ) considerations underpinning the 2012 pta the 2012 pta, which was signed by the minister of finance and myself in september 2012, recognises the flexible approach needed in making monetary policy decisions. several considerations were important in this regard. • the 1 to 3 percent target range remains the central focus of the bank ’ s flexible inflation targeting framework, as has been the case since 2002. the range was deliberately framed in a medium term context, with an “ on average ” connotation and recognized that inflation might move outside this band due to global developments in commodity markets, natural disasters, and / or government fiscal and regulatory decisions. • the concept of a mid - point objective was introduced with the objective of helping to lower and stabilise inflation expectations close to 2 percent. this was important because cpi inflation had averaged 2. 3 percent since 2000 and measures of inflation expectations were averaging 2. 5 percent or higher. the language deliberately emphasised the medium - term context of the mid - point objective. this was because attempting to move rapidly to a mid - point target could create damaging volatility in output and key relative prices, including asset prices, that could, in turn, threaten financial stability and

' t need more training - they need retraining so they can obtain new jobs. 1 / 3 bis - central bankers'speeches the jenga tower whenever i talk about economic prosperity, i like to use the analogy of a jenga tower : each piece is critical to the stability of the whole. take one piece out, and the tower becomes unstable. take the wrong piece out, and the whole tower can collapse. our jenga tower encompasses a whole host of important pieces. job training is one. workers need skills that employers are looking for, and job training needs to be accessible. transportation is another. employees need dependable transportation to get to training programs - and to their jobs. and broadband is sorely needed in many households. i can't tell you how many people said, " good luck getting broadband, " when i told them i was buying a home in columbia county. it's a problem that plagues rural communities throughout the second district. 2 investing in businesses and innovation is also an important piece of our tower. businesses need resources to innovate so they can grow and prosper - and that, in turn, benefits entire communities. all of you here today - representing employers, schools, nonprofits, funders, and community organizations - are key to our tower's foundation. you are what makes our tower strong. workforce development components how do we reinforce our tower? there have been a number of initiatives - and quite a bit of research - regarding workforce development throughout the federal reserve system. this includes a three - volume book called investing in america's workforce, 3 which highlights the ways investments can overcome systemic barriers to employment. while there is no one - size - fits - all approach, there are many promising efforts to learn from. the role of community colleges cannot be overstated. a report released shortly after i came to the new york fed showed that the typical new york state community college engages with more than 100 local employers, spanning every industry sector. 4 more recently, the new york fed hosted an event that explored ways to advance economic prosperity in rural areas. 5 many great insights were shared, including a framework for workforce development programs that contained four principles : 1 ) fashioning a strategy around a community's assets ; 2 ) designing programs that are adaptable ; 3 ) including traditionally marginalized groups in decision - making ; and 4 ) bringing together community, business, and government leaders - like you are doing today. 2 / 3 bis -