The third element, related to the second, is for the central bank to conduct monetary policy in a systematic or rule-like manner.2 The fourth element, and arguably the most important, is for the central bank to set monetary policy independently from the fiscal authorities.
As many of you know, last year Chairman Bernanke asked Governor Yellen, Governor Raskin, Chicago Fed President Evans, and me to serve on a subcommittee whose task was to develop recommendations to improve the Federal Open Market Committee’s communications. In January, the FOMC adopted two initiatives brought forward by the subcommittee.