More positively, recent Fed actions have actually reduced uncertainty. Specifically, the Fed has provided greater certainty by indicating that its policy rate could be expected to remain at extremely low levels until mid-2015. It has also provided more certainty with respect to its reaction function, linking future unconventional monetary policy to substantial improvements in the outlook for the U.S. labour market.
In addition, the Fed has indicated that it will leave highly accommodative policy in place “for a considerable time after the economic recovery strengthens.” If conditions were to deteriorate and further easing were required, the U.S. central bank could provide even greater certainty with further refinements, such as precise numerical targets and a time frame for achieving these targets.