9  Sims (2002) analyzes the policy process in four major central banks, including the Federal Reserve. He describes the central role played by forecasts of inflation and output, developed by a combination of models and expert judgment. Forecasts may be contingent on different assumptions about the policy path or about the shocks hitting the economy.
To an increasing degree, forecasts are accompanied with measures of uncertainty, such as the “fan charts” published by the Bank of England to describe the range of statistically probable outcomes.