And it will likely remain a communications challenge as the Committee coordinates the unwinding of the Fed’s balance sheet with the gradual increase in the policy rate. Implementing forward guidance I have indicated conceptually why a systematic approach to communications is important but have yet to discuss how a central bank might implement such an approach.
This issue has received increased attention in recent years, with various central banks adopting different strategies. The differences are based on alternative economic viewpoints as well as on varying institutional structures. I think the Fed can learn a great deal from the various approaches.