inflation, which in turn could lead to an increasing shortfall of inflation from our objective. 1 indeed, some indicators of longer - run inflation expectations have been on the soft side in recent months. putting all of the pieces together, it appears the economy has been doing well so far this year, bolstered by confident consumers and a strong job market. and after fluctuations earlier in the year, financial markets currently appear supportive of growth, with borrowing rates low and the stock market at all - time highs. while the modal outlook is solid, the downside risks, if they materialize, could weigh on economic activity. taking into account the downside risks at a time when inflation is on the soft side would argue for softening the expected path of monetary policy according to basic principles of risk management. of course, my judgment about the actual path of policy will continue to be influenced by the evolution of the data and the risks. i am mindful that low spreads on corporate credit, together with risky corporate debt at historic highs, suggest financial imbalances are growing. we should be addressing these financial imbalances by activation of the countercyclical capital buffer, more rigorous use of stress tests, and active monitoring of leveraged lending. so what does this mean for you and the families and businesses you serve in and around 1 / 2 bis central bankers'speeches scranton? i hope and expect that the progress you have made in transforming the region ’ s economy will continue as the expansion extends into its 11th year. i am well aware of the challenges this area has been working to overcome since the great recession. and i am impressed by how much has been accomplished here. you have had important success in attracting new logistics jobs to take advantage of northeastern pennsylvania ’ s proximity to major cities. you are making important investments in the forward - looking “ eds and meds ” ( education and health - care ) sectors by leveraging the 19 colleges and universities in and around scranton. there are signs that these investments are paying off. household incomes in scranton are growing again. the area ’ s unemployment rate is close to its lowest level in the past 40 years. i look forward to hearing from the community bankers gathered here today about the outlook for families and businesses in northeastern pennsylvania and how you are helping the region invest and grow. and i am looking forward to continuing the discussions tomorrow, when i will visit with the scranton area community foundation to discuss the northeastern pennsylvania equitable transportation initiative, nepa moves,

, the federal reserve enhanced its communications by publishing these forecasts on a quarterly basis, lengthening the horizon of the projections, and providing additional quantitative and qualitative information ( bernanke, 2007 ; mishkin, 2007d ). almost two centuries ago, british economist david ricardo summarized the argument for granting operational independence to the central bank : " it is said that government could not be safely entrusted with the power of issuing paper money ; that it would most certainly abuse it. … there would, i confess, be great danger of this if government – that is to say, the ministers – were themselves to be entrusted with the power of issuing paper money " ( ricardo, 1823 ). central bank should have full authority to determine the short - run setting of its policy instruments, without any external interference. 19 in addition, i believe that central bank communication is crucial in promoting public support for maintaining low and stable inflation. indeed, in a democratic society, every government agency is ultimately accountable to the public, and the establishment of transparent objectives and of a clear policy strategy plays an essential role in facilitating that accountability. the old adage correctly states that " actions speak louder than words, " and, clearly, just announcing an objective for inflation does not mean anything unless the actual policies pursued by the monetary authorities are consistent with the objective. words, however, do matter if those words help ensure that the appropriate policy actions will be taken and strengthen the public's confidence that the central bank will continue to act in a manner consistent with its long - run objectives. as i have argued here, the increase in transparency and accountability, which results from clear communication about inflation objectives and about how monetary policy will be conducted to achieve these objectives, creates stronger incentives for central banks to avoid the pursuit of short - run overly expansionary policies. this approach also helps establish a credible commitment to pursuing policies that keep inflation under control and economic activity growing on a sustainable path. the international experience my discussion so far has been pretty theoretical. but one might reasonably ask whether communication about inflation objectives and about how monetary policy is conducted to achieve these objectives actually helps strengthen the commitment to fostering low and stable inflation, and thereby produces better economic outcomes. more specifically : does communication of inflation objectives lead to increased public support for the central bank? improved inflation performance? more firmly anchored inflation expectations? over the past two decades, most of the major foreign central banks have adopted frameworks which have the overriding objective of bolstering public confidence