with the unprecedented situation. the research community had found that such forward guidance could be very effective in the context of the new keynesian paradigm. 6 when loretta became president of the federal reserve bank of cleveland in 2014, she supported the continued use of forward guidance during these extraordinary times, in particular to communicate a lower - forlonger policy that could provide accommodation in the presence of the effective lower bound constraint. she also insisted that forward guidance could be used effectively even in normal times as a means of clarifying the fomc's reaction function. loretta, as a member of the fomc subcommittee on communications, developed and advocated for several proposals to improve communications. one proposal was to publish a measure of uncertainty surrounding the sep forecast numbers. she was concerned that uncertainty could be underestimated by the public if it wasn't communicated. the proposal was adopted, and " fan " charts showing uncertainty associated with the median projections have been a feature of the sep materials since 2017. progress toward greater transparency and more effective communication has since continued. for example, since 2019 chair powell has been holding a press conference after every fomc meeting. researchers at academic and policy institutions have made advances in recent years in measuring the effectiveness of central bank communication. for example, several researchers are now using natural language processing techniques to analyze the impact of central bank communications - including statements, press conferences, speeches, and minutes - on asset prices and economic outcomes. 7 another development is the identification of the effect that federal reserve policy communications may have on asset prices using high - frequency financial market data. this empirical strategy has allowed researchers to establish new facts. for example, some economists have found that policymaker speeches affect asset prices as much as the information released via fomc statements and press conferences, and the effects 3 / 6 bis - central bankers'speeches that central bank communications have on asset prices can differ, depending on whether the communication conveys news about the policy rate path or about the economic outlook. 8 communication challenges facing policymakers as my brief retelling indicates, we have come a long way. over the past 30 years, the fed and many other central banks have embraced transparency and deliberately used their communications as a policy tool. and researchers keep developing better methods to measure and evaluate our communications. at this point, you may be wondering how much longer i am going to talk. and that question leads me to the following one, which is salient for my topic today : are there limits to the benefits

couple of years debate, the prospects for achieving meaningful reform now look promising, following the fund ’ s annual meetings in singapore. the agenda for reforming surveillance includes a new focus on multilateral issues, including global financial issues and a new procedure for multilateral surveillance. the managing director has launched a first round of multilateral consultations on global imbalances. these are a potentially important innovation in the way the fund interacts with key policymakers, but as they are still under way, i shall not comment further. instead i want to focus on the other key area for reform, where there are some important outstanding issues. this is the work now in hand to clarify and update the operational guidance on surveillance, through a thorough review of the 1977 decision and by designing a new annual remit for surveillance. this is aiming to provide a clear, up - to - date set of guiding principles, and a firmer operational foundation for surveillance. this matters because the fund can only be effective in encouraging countries to fulfil their obligations if there is a clear and shared view of what those commitments are, and a coherent and transparent operational framework for assessing compliance. there also needs to be greater clarity about the fund ’ s obligations, and how it is to be held to account for fulfilling them. a new surveillance decision the 1977 surveillance decision needs to be replaced by a coherent and comprehensive set of principles covering all aspects of the fund ’ s surveillance. a new decision should start from the overarching objective to promote external stability. consistent with this, it should shift the emphasis toward multilateral surveillance and the analysis of policy spillovers. and, unlike the 1977 decision, it should cover both exchange rate policies and domestic policies insofar as they may affect external stability, rather than exchange rate policies, per se. this is a key area where the consensus has moved on since the late 1970s. it is now well recognised that exchange rate policies cannot be divorced from domestic policies. where exchange rates are allowed to float freely, the paths they take will be affected by a wide range of domestic factors, including both monetary and fiscal policies. these policies can have significant foreign exchange and spill - over effects even when they are not implemented for an explicit balance of payments purpose. but even where nominal exchange rates are pegged, competitiveness and hence trade flows depend crucially on relative inflation rates, which reflect domestic monetary and financial policies. so both the effects of a fixed exchange rate, and questions about whether such a peg is sustainable