curve - policymakers might prefer a more accommodative monetary policy. given the complexity of the signal - extraction problem, we should approach our task with considerable humility. we recognize that financial assets prices reflect the collective views of market participants. they may reflect not only changes in expected paths and uncertainty about those paths but also shifting relationships, changes in investor risk preferences, and developments in the structure of various securities markets. thus, we use market prices alongside many other economic indicators, including statistical releases and large amounts of qualitative evidence. we can enhance the role of markets by improving the availability of high - quality data for example, about corporate financial conditions and by working to improve our ability to extract signals from market data. the most significant challenge in this setting is, however, perhaps endemic to the task : our own policies and actions affect market prices. as a result, when we look to financial markets for information, the information we seek may be shaped in part by our own views. the more that " market information " reflects our own actions, the less it is useful as a source of independent information to inform our policy judgments. we need to be alert to this " mirror problem, " in which markets can cease to provide independent information on current and prospective financial and economic developments. in the extreme case, financial markets keenly follow the federal reserve, the federal reserve is equally attuned to the latest financial quotes, and fundamentals of the economy are obscured. under such circumstances, asset prices might teach us only about our skills as communicators. fortunately, the prospect for profits - the critical underpinning of all markets - mitigates this problem. investors have strong financial incentives to analyze information about inflation and the macroeconomy to better predict the path of monetary policy. after all, fed communications and forecasts are fallible. the anticipated dispersion of investors'views implies a distribution of returns with substantial rewards for those who get it right. market - based information is surely important in determining good monetary policy. this does not mean, however, that the fed's goal is to align its views with those of the markets or that it wants the markets'views to match its own. instead, policymakers benefit greatly by listening to views expressed in markets that are at least somewhat independent of fomc communications. we can further enhance the role of markets by enriching our understanding of the interplay between communication policies of central banks and market prices. good

in real time the growing threat of covid - 19, we had no way to predict what events or ‘ shocks ’ would happen in the future. and, as we learnt of ‘ shocks ’ we had to make assumptions around how big they would be, how they would impact the economy and inflation – is it a demand or supply shock, or a bit of both – and how long their effects would be felt – ‘ team transitory ’ versus ‘ team persistent ’. policymakers have had to grapple with many large shocks, including national lockdowns, travel restrictions, significant armed conflict between nations, supply - chain breakdowns, energy price spikes, and the impact of extreme climate events on food prices. it has been a long time since we ’ ve experienced calm sailing conditions. how should policymakers deal with uncertainty? navigating monetary policy, with a 1 to 2 - year lag between policy action and ultimate outcome, is akin to ocean circumnavigation. ocean - going sailors do not need to ‘ tack ’ when other boats do. they are in their own vessel pursuing their own ultimate destination. further, navigators can ’ t change the weather, but they can change their course and alter their pace as conditions change. however, given the time and distance being travelled, they must also retain the confidence of their crew and passengers over the long term. mutiny is not a sign of success. as central bankers, we can improve the way we measure and interpret information. we can research the economy and update our models of how it works. we can think ahead to future shocks, modelling them and gaming them out, and we can learn from past ones. but this can only take us a small way to reducing the uncertainty we face. we therefore accept uncertainty, and we navigate through it. we chart a course, and then look for signs that tell us whether we need to deviate and chart a new one. when we experience a shock, it doesn ’ t change the goal, the island doesn ’ t move, it just changes how we will get there ( figure 4 ). we focus on the goal over the horizon that matters to us. _ _ _ _ _ _ _ _ _ _ _ _ 6 see alanya - beltran et al. ( 2024 ). 7 there have been numerous reviews of central banks ’ policy responses over recent years. our own review and assessment of the formulation and implementation of monetary policy ( rafimp ) provides nine lessons