The rationale for the Federal Reserve's enhanced communication strategy The modern approach to the formulation of monetary policy is generally characterized by an optimization problem in which policymakers maximize a specific objective function subject to a set of constraints.
At first glance, this problem looks a lot like the typical optimal control problem that MIT undergraduates might study in an engineering course--say that of directing a rocket ship to the moon. However, there is a crucial difference: A rocket ship responds only to forces currently acting on it and does not try to anticipate how its controllers will change their settings.