Arguably, it’s been a long time since monetary policy was “normal,” so it’s worth describing what normal looks like in some detail. At its most basic level, policy-making will remain the same: The path of interest rates will continue to be guided strategically by our dual mandate objectives and shaped tactically by the data and their implications for the economic outlook. We’ll continue to be transparent about our thinking about the economy and monetary policy. But, changing circumstances call for some changes in how the FOMC communicates its policy views. Now that interest rates are well away from zero and the economy is humming along, the case for strong forward guidance about future policy actions is becoming less compelling. For one, the future direction of policy will no longer be as clear as it was during the past few years. When interest rates were extremely low, it was obvious that the direction for rates was upward, toward more normal levels, and our forward guidance reinforced that point. At some point in the future, it will no longer be clear whether interest rates need to go up or down, and explicit forward guidance about the future path of policy will no longer be appropriate.
But, as we move toward more “normal” conduct of monetary policy, we shouldn’t rest easy and think we won’t confront our own fair share of future challenges. The most important one in front of us today is sustaining the long economic expansion without allowing risks to grow that ultimately undermine economic prosperity. Whatever the future may bring, I will be guided by our dual mandate, a heavy dependence on data, and a steadfast commitment to transparency. Thank you. 1 1 See FOMC Statement and Implementation Note, September 26, 2018. 2 2 See Minutes of the Federal Open Market Committee, March 17–18, 2015. 3 3 See FOMC Communications related to Policy Normalization, and Simon Potter, Money Markets and Monetary  Policy Normalization, April 15, 2015. 4 4 See FOMC Statement and Implementation Note, September 26, 2018. 5 5 See FOMC issues addendum to the Policy Normalization Principles and Plans, June 14, 2017. 6 6 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 7 7 See FOMC Statement and Implementation Note, September 26, 2018. 8 4/5  BIS central bankers' speeches  8 8 See Jerome H. Powell, Monetary Policy in a Changing Economy, August 24, 2018. 9 9 See Policy Normalization Principles and Plans, as adopted effective September 16, 2014. 10 10 See Simon Potter, Confidence in the Implementation of U.S. Monetary Policy Normalization, August 4, 2018. 5/5  BIS central bankers' speeches