is important in determining the central bank ’ s reaction function, i think policymakers can strike the best balance between a monetary policy that fully incorporates the complexity of the world as it is, while, at the same time, retaining considerable clarity about how the fomc is likely to respond to changing circumstances. a formal policy rule such as the taylor rule misses this balance by going too far in one direction. what is important for attaining the federal reserve ’ s mandated objectives is not that monetary policy is described in terms of a formal prescriptive rule, but rather that the fomc ’ s intentions and strategy are well understood by the public. this argues for clear communication through the fomc meeting statements and minutes, the fomc ’ s statement concerning its longer - term goals and monetary policy strategy, the chair ’ s fomc press conferences and testimonies before congress, and speeches by the chair and other fomc participants. but it also is important that the strategy be the “ right ” reaction function. this means a policy approach that responds appropriately to important factors beyond the two parameters of the taylor rule – the output gap estimate and the rate of inflation. thank you for your kind attention. an analogy can be made to the applicability of a friedman k - percent monetary aggregate rule. just as a k - percent rule requires a stable relationship between a monetary aggregate and nominal gdp ( i. e., stable money velocity ), a taylor rule needs a stable relationship between the policy rate and financial conditions. bis central bankers ’ speeches

mario draghi : ecb press conference - introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 20 october 2016. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today ’ s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. regarding non - standard monetary policy measures, we confirm that the monthly asset purchases of €80 billion are intended to run until the end of march 2017, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. the information that has become available since our meeting in early september confirms a continued moderate but steady recovery of the euro area economy and a gradual rise in inflation, in line with our previous expectations. the euro area economy has continued to show resilience to the adverse effects of global economic and political uncertainty, aided by our comprehensive monetary policy measures, which ensure very favourable financing conditions for firms and households. overall, however, the baseline scenario remains subject to downside risks. looking ahead, we remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below, but close to, 2 % over the medium term. to that end, we will continue to act, if warranted, by using all the instruments available within our mandate. in december the governing council ’ s assessment will benefit from the new staff macroeconomic projections extending through to 2019 and from the work of the eurosystem committees on the options to ensure the smooth implementation of our purchase programme until march 2017, or beyond, if necessary. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area increased by 0. 3 %, quarter on quarter, in the second quarter of 2016, after 0. 5 % in the first quarter. the latest data and survey results point to continued growth in the third quarter of 2016, at around the same pace as in the second quarter. looking further ahead, we expect the economic expansion to