9 Our evolving understanding of four key economic developments motivated our review. First, assessments of the potential, or longer-run, growth rate of the economy have declined. For example, since January 2012, the median estimate of potential growth from FOMC participants has fallen from 2.5 percent to 1.8 percent (see figure 1).
For instance, when measured ex post, with the data available until 2008, the US output gap over the period 2002–2004 turned out to be very small, even non-existent, while ex ante it was estimated at around 2% of GDP. 5 So what should a central bank do to implement and communicate an appropriate exit strategy? Let me make a few comments on this.