This reflects the need for our monetary policy to have a forward-looking, medium-term orientation. It also acknowledges that short-term volatility in prices owing to non-monetary shocks cannot be controlled by monetary policy and that monetary policy should therefore only be held accountable for price developments over a longer horizon.
It falls to the Congress to determine how best to address the competing claims on our limited resources. In doing so, you will need to consider not only the distributional effects of policy changes but also the broader economic effects on labor supply, retirement behavior, and private saving. In the end, the consequences for the U.S. economy of doing nothing could be severe.