and the federal reserve as unnecessary and even counterproductive. as a result, in 1994, the fomc began explicitly announcing its policy decisions. in a bid to further increase transparency, the fomc introduced a balance of risks assessment in early 2000 as part of its policy decisions. the balance of risks assessment was designed as a vehicle to communicate the committee's sense of the economic outlook over the " foreseeable future. " the foreseeable future is one of those wonderful phrases we central bankers get to use. it is not intended to refer to a specific time horizon, and indeed, when the fomc introduced the balance of risks statement, it suggested that the time horizon encompassed by the foreseeable future might well vary depending on the economic circumstances. however, in contrast to the previous " bias " statement, the concept of the foreseeable future in the balance of risks statement was intended to extend well beyond the upcoming intermeeting period. the balance of risks statement is released to the public at the conclusion of each fomc meeting. by contrast, prior to 1999, the " bias " statement was only made known to the public after a six - week lag in the release of the minutes for each fomc meeting. this past march, the fomc took a further step toward increased transparency by including the roll call of the vote on the federal funds rate target, as well as an indication of the preferred policy choice of any dissenters. indeed, press coverage following the september fomc meeting noted the two dissents in favor of a policy easing reported in the announcement following that meeting. so why have the federal reserve and many other central banks moved toward a policy framework involving greater transparency? the principle that central banks should be free of political interference in pursuing legally mandated objectives is now widely regarded as a key tenet supporting central bank credibility and effectiveness. however, democratic societies rightly should expect that central banks, as public institutions, should be publicly accountable for their actions, and greater transparency in central banking is an important factor in ensuring that this is the case. but central banks have found transparency useful for monetary policy purposes as well. by providing a clear rationale for their actions and an assessment of the economic outlook, central banks can reduce unnecessary uncertainties faced by market participants. moreover, investors armed with a clearer understanding of the central bank's motives and views are better able to anticipate future monetary policy actions. this, in turn,

susan s bies : north american monetary policy - key developments in recent times speech by ms susan s bies, member of the board of governors of the us federal reserve system, at the canadian american business council's rbc distinguished speakers series, embassy of canada, washington, dc, 12 november 2002. * * * it is a great pleasure for me to be here with you today. certainly, the theme for today's session - - " north american monetary policy " - - ought to provoke some lively discussion. let me start with the usual disclaimer - - my remarks reflect my personal views and should not be taken as an official view of the board of governors or the federal reserve system. as you know, the fomc last week chose to lower the target federal funds rate 50 basis points to a forty - year low of 1 - 1 / 4 percent and also indicated that it viewed the risks to the economy going forward as balanced. of course, the macroeconomic developments over the last few years that have brought us to this point have been quite remarkable, and i'll offer some perspectives on some of those key developments in a moment. over this same period, there have been some quite important developments in the art and science of central banking, and it seems useful to pause here at the outset to take stock of this evolution in central banking practice in the united states. though barely a single page in length, last week's fomc announcement embodied all of the key structural elements of the current monetary policy framework in the united states. the text of the announcement provided a rationale for the decision in terms of the fomc's twin objectives - - long - run price stability and sustainable economic growth. the policy decision itself involved a specific setting for the key monetary policy instrument - - the target federal funds rate. and the goals of central bank transparency and accountability were served by a discussion of the committee's views about the important forces impinging on the economy at the present time and its sense of the balance of risks to the economy in the future. all three of these key elements of the monetary policy framework - - the fomc's objectives, primary policy instrument, and emphasis on transparency - - have undergone significant change in recent years. as indicated in the original version of the federal reserve act in 1913, the federal reserve was founded " to furnish an elastic currency " and to promote " more effective supervision of banking. " it wasn't until