*  *  *  I am pleased to be here with you this morning, and I thank Ken Guenther and the ICBA for inviting me to speak. Ken suggested that I share my thoughts with you about two initiatives that I have been working on recently. The first, published early this year, analyzed global financial sector consolidation in the G-10 countries.
In certain cases, the market’s assessment of the economic outlook may clearly deviate from the central bank’s assessment. Moreover, even with a shared assessment of the outlook, the market may expect a systematically different policy response than pursued by the central bank. In these cases, forward guidance can help the central bank in clarifying its assessment of future economic conditions and its reaction function.