, and community groups – to discuss their concerns and to gain information about market developments. we are conducting a top - to - bottom review of possible actions we might take to help prevent recurrence of these problems. first, we are committed to providing more - effective disclosures to help consumers defend against improper lending. three years ago, the board began a comprehensive review of regulation z, which implements the truth in lending act ( tila ). the initial focus of our review was on disclosures related to credit cards and other revolving credit accounts. after conducting extensive consumer testing, we issued a proposal in may that would require credit card issuers to provide clearer and easier - to - understand disclosures to customers. in particular, the new disclosures would highlight applicable rates and fees, particularly penalties that might be imposed. the proposed rules would also require card issuers to provide forty - five days ’ advance notice of a rate increase or any other change in account terms so that consumers will not be surprised by unexpected charges and will have time to explore alternatives. we are now engaged in a similar review of the tila rules for mortgage loans. we began this review last year by holding four public hearings across the country, during which we gathered information on the adequacy of disclosures for mortgages, particularly for nontraditional and adjustable - rate products. as we did with credit card lending, we will conduct extensive consumer testing of proposed disclosures. because the process of designing and testing disclosures involves many trial runs, especially given today ’ s diverse and sometimes complex credit products, it may take some time to complete our review and propose new disclosures. however, some other actions can be implemented more quickly. by the end of the year, we will propose changes to tila rules to address concerns about mortgage loan advertisements and solicitations that may be incomplete or misleading and to require lenders to provide mortgage disclosures more quickly so that consumers can get the information they need when it is most useful to them. we already have improved a disclosure that creditors must provide to every applicant for an adjustable - rate mortgage product to explain better the features and risks of these products, such as “ payment shock ” and rising loan balances. we are certainly aware, however, that disclosure alone may not be sufficient to protect consumers. accordingly, we plan to exercise our authority under the home ownership and equity protection act ( hoepa ) to address specific practices that are unfair or deceptive. we held a

a “ balanced approach ” in seeking to mitigate deviations of inflation from 2 percent and employment from estimates of its maximum sustainable level. i see this language as entirely consistent with modern descriptions of flexible inflation targeting. for the past four years, a major challenge for the federal reserve and many other central banks has been how to address persistently high unemployment when the policy rate is at or near the effective lower bound. this troubling situation has naturally and appropriately given rise to extensive discussion about alternative policy frameworks. i have been very keen, however, to retain what i see as the key ingredient of a flexible inflation - targeting framework : clear communication about goals and how central banks intend to achieve them. with respect to the federal reserve ’ s goals, price stability and maximum employment are not only mandated by the congress, but also easily understandable and widely embraced. well - anchored inflation expectations have proven to be an immense asset in conducting monetary policy. they ’ ve helped keep inflation low and stable while monetary policy has see gill hammond ( 2012 ), state of the art of inflation targeting ( pdf ), centre for central banking studies, ccbs handbook no. 29 ( london : bank of england ). bis central bankers ’ speeches been used to help promote a healthy economy. after the onset of the financial crisis, these stable expectations also helped the united states avoid excessive disinflation or even deflation. of course, many central banks have, in the wake of the crisis, found it challenging to provide appropriate monetary stimulus after their policy interest rate hit the effective lower bound. this is the point where “ many instruments ” enters the discussion. the main tools for the fomc have been forward guidance on the future path of the federal funds rate and largescale asset purchases. the objective of forward guidance is to affect expectations about how long the highly accommodative stance of the policy interest rate will be maintained as conditions improve. by lowering private - sector expectations of the future path of short - term rates, this guidance can reduce longer - term interest rates and also raise asset prices, in turn, stimulating aggregate demand. absent such forward guidance, the public might expect the federal funds rate to follow a path suggested by past fomc behavior in “ normal times ” – for example, the behavior captured by john taylor ’ s famous taylor rule. i am persuaded, however, by the arguments laid out by our panelist michael woodford and others suggesting that the policy rate should, under present