for release on delivery 11 : 45 a. m. est november 30, 2016 a view from the fed remarks by jerome h. powell member board of governors of the federal reserve system at “ understanding fedspeak, ” an event cosponsored by the hutchins center on fiscal and monetary policy at the brookings institution and the center for financial economics at johns hopkins university washington, d. c. november 30, 2016 thanks to david wessel and the hutchins center on fiscal and monetary policy at the brookings institution for putting together this event. 1 today i will share my own views on the federal open market committee ’ s ( fomc ) public communications, which are designed to serve three important purposes. the first is to provide the transparency that enables the congress and the public to hold the committee accountable for its decisions on monetary policy. the second is to enhance the effectiveness of monetary policy. if the public understands the central bank ’ s views on the economy and monetary policy, then households and businesses will take those views into account in making their spending and investment plans ; policy will be more effective as a result. and the third is to show the full range of fomc participants ’ views, even if doing so may sometimes make it difficult for the public to identify a consensus view. in my view, acknowledgment of this diversity of views is important in sustaining the public ’ s support over time for the federal reserve as an institution - - what jon faust refers to in his paper as our “ democratic legitimacy. ” 2 in my comments, i will also react to jon ’ s thoughtprovoking and well - reasoned paper. the modern era i will start with a brief tour of the modern era of fomc communications, beginning with the issuance of the first postmeeting statement in february 1994. 3 that the views i express here are my own. see jon faust ( 2016 ), “ oh, what a tangled web we weave : monetary policy transparency in divisive times, ” paper prepared for “ understanding fedspeak, ” an event cosponsored by the hutchins center on fiscal and monetary policy at the brookings institution and the center for financial economics at johns hopkins university, held at the brookings institution, washington, november 30. for a review fomc communications, see mark a. wynne ( 2013 ), “ a short history of fomc communication, ” economic letter, vol. 8 (

household consumption expenditure is likely to remain subdued, further exacerbated by high debt levels, rising costs of debt servicing, and slow employment growth. consumption expenditure has been further constrained by the absence of significant wealth effects owing to the weak performance of asset markets, particularly the housing market. these factors have contributed to persistence of high rates of unemployment. in the first quarter of 2016 the official unemployment rate increased to 26, 7 per cent. annual losses in employment have been recorded in the manufacturing, private households, electricity, agriculture and transport sectors. youth unemployment remains a serious challenge, having increased markedly to 54, 5 per cent in the first quarter of 2016. 3 the unemployment challenge was emphasized by mr david lipton, first deputy managing director of the imf, in johannesburg last week. in his speech he pointed to the limited progress on reforms to remedy the unemployment situation and recommended a fresh and energetic review of south africa ’ s policies, followed by action. 4 sarb quarterly bulletin, june 2016. david lipton. 2016. “ bridging south africa ’ s economic divide ” lecture given at the university of witwatersrand. july 19. bis central bankers ’ speeches although the negative growth in the first quarter of this year is anticipated to have been the low point of the cycle, the recovery is expected to be weak. at the july meeting of the mpc, the sarb revised downward the growth projection for this year to zero per cent, from the previous projection of 0, 6 per cent. in order to achieve a growth rate of zero per cent, the economy will need to grow by between 0. 8 and 1. 0 per cent in each of the three remaining quarters. for growth to be at 0. 5 per cent for 2016, we would require growth of above 2 per cent for the remainder of the year. furthermore, the sarb does not believe that a contraction in the second quarter is likely – a result that would tip the economy into a technical recession. the reasons for this are reasonably positive economic data thus far for the second quarter, in particular, the mining and manufacturing sectors are expected to add positively to growth, consistent with the barclays pmi which has been above the neutral 50 level since march. in addition, the ber manufacturing confidence index also improved, while the real value of building plans passed is indicative of some improvement in the sector, particularly with respect to residential construction. looking further out, growth rates of 1, 1 per cent and 1,