. where do we stand now, nine months into the program? with respect to the economic fundamentals, both the current state of the labor market, as well as the outlook, have improved since september 2012. back then, the unemployment rate was 8. 1percent and nonfarm payrolls were reported to have increased at a monthly rate of 97, 000 over the prior six months ; today, those figures are 7. 6 percent and 194, 000, respectively. back then, fomc participants were forecasting unemployment rates around 7 – 3 / 4 percent and 7 percent for year - end 2013 and 2014, respectively, in our summary of economic projections ; as of the june 2013 round, these forecasts have been revised down roughly ½ percentage point each. while it is difficult to determine precisely, i believe that our asset purchases since september have supported this improvement. for example, some of the brightest spots in recent months have been sectors that traditionally respond to monetary accommodation, such as housing and autos. although asset purchases also bring with them various costs and risks – and i have been particularly concerned about risks relating to financial stability – thus far i would judge that they have passed the cost - benefit test. however, this very progress has brought communications challenges to the fore, since the further down the road we get, the more information the market demands about the conditions that would lead us to reduce and eventually end our purchases. this imperative for clarity provides the backdrop against which our current messaging should be interpreted. in particular, i view chairman bernanke ’ s remarks at his press conference – in which he suggested that if the economy progresses generally as we anticipate then the asset bis central bankers ’ speeches purchase program might be expected to wrap up when unemployment falls to the 7 percent range – as an effort to put more specificity around the heretofore less well - defined notion of “ substantial progress. ” it is important to stress that this added clarity is not a statement of unconditional optimism, nor does it represent a departure from the basic data - dependent philosophy of the asset purchase program. rather, it involves a subtler change in how data - dependence is implemented – a greater willingness to spell out what the committee is looking for, as opposed to a “ we ’ ll know it when we see it ” approach. as time passes and we make progress toward our objectives, the balance of the tradeoff between flexibility and specificity in articulating these objectives shifts. it would

have been difficult for the committee to put forward a 7 percent unemployment goal when the current program started and unemployment was 8. 1 percent ; this would have involved a lot of uncertainty about the magnitude of asset purchases required to reach this goal. however, as we get closer to our goals, the balance sheet uncertainty becomes more manageable – at the same time that the market ’ s demand for specificity goes up. in addition to guidance about the ultimate completion of the program, market participants are also eager to know about the conditions that will govern interim adjustments to the pace of purchases. here too, it makes sense for decisions to be data - dependent. however, a key point is that as we approach an fomc meeting where an adjustment decision looms, it is appropriate to give relatively heavy weight to the accumulated stock of progress toward our labor market objective and to not be excessively sensitive to the sort of near - term momentum captured by, for example, the last payroll number that comes in just before the meeting. in part, this principle just reflects sound statistical inference – one doesn ’ t want to put too much weight on one or two noisy observations. but there is more to it than that. not only do fomc actions shape market expectations, but the converse is true as well : market expectations influence fomc actions. it is difficult for the committee to take an action at any meeting that is wholly unanticipated because we don ’ t want to create undue market volatility. however, when there is a two - way feedback between financial conditions and fomc actions, an initial perception that noisy recent data play a central role in the policy process can become somewhat self - fulfilling and can itself be the cause of extraneous volatility in asset prices. thus both in an effort to make reliable judgments about the state of the economy, as well as to reduce the possibility of an undesirable feedback loop, the best approach is for the committee to be clear that in making a decision in, say, september, it will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting – as salient as these releases may appear to be to market participants. i should emphasize that this would not mean abandoning the premise that the program as a whole should be both data - dependent and forward looking. even if a data release