Second, the tightening of U.S. policy will begin only when the U.S. expansion has advanced far enough, in terms both of reducing the output gap and of moving the inflation rate closer to our 2percent goal. Thus, tightening should occur only against the backdrop of a strengthening U.S. economy and in an environment of improved household and business confidence.
The stronger U.S. economy should directly benefit our foreign trading partners by raising the demand for their exports, and perhaps also indirectly, by boosting confidence  19  See Draghi and Constâncio (2013) and Bank of England (2013). The success of forward guidance, of course, depends crucially on the ability of policymakers to make informative statements about their intentions without a formal commitment device.