median federal funds rate projection of fomc participants, represented through fan charts, which was recently incorporated into the sep. the federal reserve could be too predictable if this type of fundamental uncertainty about the economy does not show through to uncertainty about the monetary policy path, which could imply that the federal reserve was not being sufficiently responsive to incoming data bearing on the economic outlook. let me conclude with a few words on the sep results as portrayed in the dot plots. the sep is a highly useful vehicle for providing information to market participants and others for whom fed actions are important. but we need to remind ourselves that the sep data for an individual show that person ’ s judgment of the appropriate path of future fed funds rates and the corresponding paths of other variables for which the sep includes forecasts. thus, one may say that the sep shows the basis from which each participant in the fomc discussion is likely to start. but the task of moving from that information to an interest rate decision is not simple and requires a great deal of analysis and back - andforth among fomc participants at each meeting. - 12 references bernanke, ben s. ( 2004 ). “ the logic of monetary policy, ” speech delivered at the national economists club, washington, december 2, https : / / www. federalreserve. gov / boarddocs / speeches / 2004 / 20041202 / default. htm. - - - - - - - - ( 2013a ). “ communication and monetary policy, ” speech delivered at the national economists club annual dinner, herbert stein memorial lecture, washington, november 19, https : / / www. federalreserve. gov / newsevents / speech / bernanke20131119a. htm. - - - - - - - - ( 2013b ). “ statement of hon. ben bernanke, chairman of the board of governors of the federal reserve system, washington, dc, ” in the economic outlook, hearing before the joint economic committee, congress of the united states, may 22, senate hearing 113 - 62, 113 cong. washington : government printing office, https : / / www. gpo. gov / fdsys / pkg / chrg - 113shrg81472 / pdf / chrg113shrg81472. pdf. - - - - - - - - ( 2013c ). “ transcript of chairman bernanke ’ s press

markets? clear communication of the federal open market committee ’ s ( fomc ’ s ) views on the economic outlook and the likely evolution of policy is essential in managing the market ’ s expectations. the committee has a number of communication outlets, including the policy statement, the chair ’ s news conference, and the summary of economic projections ( sep ). the sep in particular has been useful in providing information on policymakers ’ assessments of the potential growth rate of the economy and r *, the equilibrium real interest rate, both of which help guide the market ’ s expectations of the eventual path of policy. however, avoiding unintended market reactions has not always been easy. the example that immediately comes to mind is the taper tantrum of mid - 2013. to recap, over the course of may and june in 2013, the yield on 10 - year treasury securities increased almost 1 percentage point amid increased market discussion of the eventual tapering of fed asset purchases and some key communications on the topic ( figure 1 ). 4 in particular, the 10 - year yield rose about 10 basis points after then chairman bernanke discussed tapering in public for the first time during the question - and - answer session of his joint economic committee testimony on may 22, commenting that the fomc could historically, there have been times when central banks have preferred to surprise markets - - most notably, when changing the value of exchange rate pegs during the era of fixed exchanges. indicating that a change in the peg was coming would invite an immediate run on the currency, at a significant cost to the central bank ’ s foreign reserves - - even in economies with extensive capital controls. also notably, eurodollar futures rates and ois ( overnight index swap ) forward rates for intermediate horizons rose sharply, likely in part because some investors who were surprised by the tapering news also revised their expectations about the path of the policy rate. - 3reduce the pace of purchases “ in the next few meetings ” if it saw continued improvement in the labor market that it was confident would be sustained. 5 yields rose even more sharply after the june fomc meeting, when, during his postmeeting press conference, chairman bernanke noted that if the economy evolved as expected, the fomc anticipated reducing the pace of purchases in the latter part of 2013 and halting purchases altogether by the middle of 2014. 6 information gathering is an important part of managing market expectations - - for the simple reason that you