In retrospect, the clear communication of policy provided notable benefits, in my view, by increasing the effectiveness of monetary policy while minimizing unnecessary volatility in financial markets. Third, policy moved gradually, tightening in one-quarter point increments over fourteen successive meetings. Together with expanded communication, this gradual approach served to stabilize policy expectations and damp market volatility.
In addition, the measured pace of rate increases gave the Committee time to observe the progress of the economy and to adjust its plans and communications strategy accordingly. 1 To be sure, gradualism was possible only because inflation expectations remained contained--testimony to the importance of a central bank's retaining credibility in financial markets and among businesses and households.