to be silent even about interest rate decisions, leaving the outside world to use market reactions to discern those decisions. this approach – that is looking from the so - called “ high priests ’ ” perspective – started changing back in the 90s. since then, central banks have been gradually opening up : for instance, in the mid - 90s – i would like to emphasize – only since the mid - 90s – the us federal reserve started to publicly announce its interest rate decisions in real time – something that policymakers had previously deemed unnecessary. the ecb, for its part, has not always been as transparent about monetary policy as it is now. for instance, the accounts of monetary policy meetings of the governing council began to be published publicly just a few years ago. so, what has changed? i suppose that there are two main factors to consider. 1 / 4 bis central bankers'speeches first, while being independent institutions, central banks have become increasingly accountable to the general public. this accountability leads to building public confidence through more intensive communication about monetary policy : explaining decisions based on the economic situation as well as on policymakers ’ goals. in essence, this helps strengthen the perception that a central bank is able to fulfil its mandate of ensuring price stability. in other words, the purpose of more in - depth central bank communication is not only to reduce uncertainty, but also to bolster central bank credibility. second, the post - crisis low interest rate environment laid the ground for central bank communication to play a key role, and also for it to become much more forward - looking. economic agents act in a forward - looking way, but they must manage a vast amount of information surrounded by a lot of uncertainty. as such, it is important to guide them to formulate appropriate expectations. ultimately, a better understanding of policy makers ’ actions enhances the transmission of central bank policies. hence, we started to use forward guidance as a monetary policy tool in and of itself. and, as you can see from the survey results in the graph, many central bank governors and academics claim that central bank communication has been intensifying. the use of this tool, moreover, is widespread : for example, all major central banks globally used it in order to achieve adequate accommodation in the past decade. having discussed the aims of forward guidance, i would now like to touch upon two related issues, namely, its effectiveness and its future. in the previous session, we heard discussions on the effectiveness of forward guidance. i

do not mesh. but it is not easy to see how they will coalesce into a single image. the operation of monetary policy is often said to be more of an art than a precise science. but none of us can claim to be a michelangelo. so let me take you briefly through three particular areas of uncertainty we face, in the hope that, when we get to the discussion session, you will be able to add definition and colour to my half - formed sketches. first, the slowdown in the us is an important area of uncertainty because, if the downside risk of a deeper or more prolonged slowdown materialises, we would face slower growth and lower inflation in the uk than we are projecting on our central projection. that would, of course, be grounds for us to contemplate further easing in our monetary stance. that follows because our inflation target is, importantly, a symmetrical one : we need to be just as ready to contemplate easing if we see evidence on the downside of the economy underperforming, and hence the likelihood of inflation running over time materially below our 2 1 / 2 % target, as we would be to exercise restraint on the upside. we take this symmetrical nature of our responsibility very seriously and there is undoubtedly a significant risk that the us slowdown could have a material dampening effect on uk activity. analysts have used a large part of the alphabet to try to describe various views of how the us economy may develop. i am not sure that i find any of these pictograms particularly helpful, not least because people are sometimes pretty vague about vital details like the dimensions of the letter they favour or the angle of its arms : a big v, after all, can feel awfully like a u when you are down the bottom and trying to find your way up again. the short answer is that none of us can pretend to know precisely how the story will develop. it will be important to keep an open mind and be prepared to adapt our assessment in the light of actual events. but in doing so, there are four considerations that i would suggest are particularly germane to this first area of uncertainty. first, we need to recognise that we are talking of slowdown in the us from what have been extremely buoyant rates of growth, maintained for several years past, as the us economy has reaped the benefits of the application of information technology and the rise in productivity growth that had engendered - the new