Third, the model can be used to evaluate the consistency of alternative policies with the Federal Reserve’s long-run objective of price stability. One of the challenges of monetary policy making is to ensure that the meeting-to-meeting policy deliberations maintain a disciplined focus on the Federal Reserve’s long-term price stability objective.
To facilitate this focus, five-year simulations under alternative policy assumptions are generally run semi-annually, to coincide with the FOMC meetings preceding the preparation of the Humphrey-Hawkins report and the Chairman’s testimony on monetary policy before Congress.