The statement has been an essential element in addressing these challenges. For example, the announcement of a target for the federal funds rate combined with a phrase such as “extended period” gives the market a sense of current policy and the policy expectations for the future.
Over time, market participants have learned how to translate that sort of statement into expectations for market and economic conditions. When we began large-scale purchases of mortgage-backed securities and agency debt, however, that decision was much more difficult to interpret. So we communicated that we expected to purchase x amount of securities over y amount of time.