choose to reveal such information in their speeches and other public communications. a natural next step would be to include a matrix of output, inflation, and unemployment, and the associated policy path assumptions that each policymaker submitted. this would make the information in the sep easier to interpret and give a better sense of the linkage between changes in economic conditions and policy. second, i believe the federal reserve should do a more comprehensive monetary policy report four times a year. currently, the chairman testifies before congress twice a year – in bis central bankers ’ speeches fact, he is doing so today – and that testimony is accompanied by a written report. in addition, the chairman holds press briefings four times a year to summarize the sep. i think there is an opportunity to combine these efforts in a more comprehensive report on monetary policy. most central banks that have adopted an inflation target have also sought to improve communication and transparency through the publication of a regular policy report. in the u. k., for example, the bank of england issues a quarterly inflation report. other countries produce a monetary policy report that discusses the central bank ’ s forecasts and the longerterm context of policy. these reports offer an opportunity to reinforce the underlying framework the central bank has adopted for the conduct of policy. i think the fed should consider producing a similar report to elaborate and reinforce its policy framework and how it relates to economic conditions. these reports will help improve the public ’ s understanding of policy, which will help make policy more effective and the central bank more accountable. third, i believe the fomc should adopt clearer guidelines on how policy evolves with economic conditions. the better the public and the markets understand how policy is likely to be adjusted as the economy changes, the more predictable policy becomes, which promotes price stability and better economic outcomes. the history of u. s. monetary policy is filled with stops and starts and changes in direction, yet the fed has communicated little about what drives those decisions. indeed, historically, central bankers have tended not to reveal such information, since they preferred discretionary policy over systematic policy. of course, policymakers do not know with any degree of certainty how economic conditions will evolve. so they cannot and should not say with any certainty what policy will be in the future. but policymakers can provide information about the factors that will influence their policy decisions. some call this a policy rule. milton friedman advocated a rule in the form of a k - percent growth rate of the money

that change in terms of how the variables in our response function changed. if we choose a consistent set of variables and systematically use them to describe our policy choices, then the public will form more accurate judgments about the likely course of policy. that will reduce uncertainty, promote stability, and lead to greater transparency. increasing transparency as i mentioned at the outset, communications has been the subject of considerable discussion in recent years. it took on heightened importance as the fomc responded to the financial crisis and recession. since december 2008, the federal funds rate target has been near zero. since the nominal federal funds rate cannot go below zero, we had to develop alternative policy tools in an effort to provide further accommodation to support the recovery, such as the large - scale asset purchase program. we also had to figure out how and what to communicate about these new tools. the asset purchase program has had many dimensions, such as the overall volume of purchases, the pace of purchases, the kind of assets targeted for purchase, and the criteria for starting and stopping the purchases. policymakers have tried to fine - tune the program along each dimension while assessing the tradeoffs among them and the tradeoffs with other policy tools, such as the traditional funds rate decision. with so many moving parts to our policy framework, it is not surprising that communication is very complicated and challenging. the task was further complicated because one of the unconventional measures employed by the fomc was so - called forward guidance. forward guidance is the central banker ’ s term for communications about the future path of policy. one way to think of forward guidance is that it is just another step toward increased transparency and effective communication of monetary policy. however, another rationale for forward guidance is that it is a way of increasing accommodation in a period when the policy rate is at or near the zero lower bound. some models suggest that when you are at the zero lower bound, it can be desirable, or optimal, to indicate that future policy rates will be kept “ lower for longer ” than might bis central bankers ’ speeches otherwise be the case. in this approach, such a commitment would tend to raise inflation expectations and lower long - term nominal rates, thereby inducing households and businesses to spend more today. this approach asks more of forward guidance than just articulating a reaction function. it takes more credibility and commitment because it requires policymakers to directly influence and manage the public ’ s beliefs about the future policy path in ways that are different from how they may have behaved in