Monetary Policy and Uncertainty At various times throughout this speech, I have raised the issue of how consequential these various sources of uncertainty are for the monetary policy decision-making process. Most of the time, the uncertainties, while needing to be acknowledged, have to be taken for what they are.
That is, we can assume that they will probably evolve only slowly, in a way that gives time for monetary policy to respond appropriately as they are realised. Another way of putting this is that monetary policy responds to the modal forecast, the most likely outcome.