However, I believe that the FOMC should do more than simply decide at each meeting whether or not to buy more assets or to keep interest rates low for longer. Any current decision is based on the FOMC’s forecast for the future, and no forecast can be perfect.
The Committee should provide a public contingency plan – that is, provide guidance on how it will respond to a variety of relevant scenarios. I believe that public contingency planning would have many benefits. Let me mention two. First, without appropriate context, the FOMC’s actions may at times suggest that its formulation of its dual mandate objectives has changed.