period goal values. in the u. s. today, that would be 2 percent for inflation and 5 - 1 / 4 to 6 percent for unemployment given today ’ s structural challenges in the labor market. 5 just about every major central bank around the world publishes something akin to such a framework statement. in one way, the federal reserve is different because, unlike other countries, we have a dual mandate, and so our framework explicitly addresses goals for both inflation and the real side of the economy. but just about every bank with a single price stability mandate also says that it will avoid undue disruptions to the real side of the economy when pursing its inflation goal. indeed, some are quite clear about following a flexible inflation targeting strategy. policy projections what about the policy projections? the forecasts for growth, the unemployment rate, and inflation that fomc participants have been submitting since 1979 have always been conditioned on each participant ’ s views of the future path of policy most likely to foster outcomes consistent with our dual mandate responsibilities – what we refer to as the appropriate path for policy. as of last january, our quarterly summary of economic projections ( sep ) now include the projected paths for the federal funds rate and qualitative information about the balance sheet that make up these views. i believe this move significantly enhances policy accountability. for example, suppose inflation were running higher than we would like, and the economic projections in the sep showed it coming down over the next couple of years. in the absence of policy projections, the public would not know whether the fomc thought inflation would simply come down on its own or whether it thought that a monetary tightening would be required to reduce inflationary pressures. the inclusion of participants ’ policy projections will help communicate such judgments. furthermore, households and businesses will be able to make better informed decisions if they have a clearer notion of future policy rates ; the potential for reduced uncertainty could also lower the risk premium embedded in longer - term interest rates. now, clearly, our forecasts of what rates are going to be three years from now will often be wrong – and sometimes by a good deal. some say this means our projections are worthless, or, even worse, will cause people to underweight interest rate risk in making economic decisions. i disagree. the accuracy of the early forecasts we write down is not so important as how the public can observe the forecasts change over time. as the economy is hit by shocks or the data come in contrary to

expectations, we will change our forecasts for both the economic variables and the policy rate. as we do, households and businesses will be able to learn more about the monetary policy reaction function. and it is this knowledge that will help them make better informed decisions. another criticism we heard on the day the projections were published was that they seemed to be inconsistent with the fomc policy statement released a couple of hours earlier. the taylor ( 1979 ), svensson ( 1997 ) and woodford ( 2003 ). note a weight of 1 on the unemployment rate is equivalent to a weight of about ¼ on the output gap. of course, policymakers could debate the relative weights to put on inflation and the real - side goal variable in their loss function. bis central bankers ’ speeches statement indicated that the committee thought economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014, but six of the 17 policy projections showed that the funds rate would be 1 - 1 / 2 percent or higher at the end of that year. well, by the next day, the markets had figured it out ; the projections are made by all fomc participants, while the statement reflects the policy views agreed upon at the meeting by the voting members of the committee. we all come into the meeting with our projections, but we then do have a real meeting : all of the participants exchange ideas and argue points of views, and then the voters on the committee come to a consensus and make a collective policy decision. the information regarding the federal funds rate in the sep does not substitute for this formal decision of the voting members of the fomc. that said, the diversity of views is a fact of life. policymakers may well have differing judgments on the appropriate stance of monetary policy in the particular economic circumstances of the moment. these communications initiatives cannot eliminate these differences of opinion. but they further discipline the parameters of our discussions, clarify the judgments that underlie our policy decisions and enhance transparency and the public ’ s ability to evaluate current monetary policy with alternative approaches. forward guidance and policy commitment in an explicit state - contingent policy the macroeconomic environment the new policy tools can also complement the kinds of accommodative policies i have been advocating for some time. the u. s. is now more than two and a half years into its modest and uneven recovery from the great recession. real gross domestic product growth has averaged just 2 - 1 / 2 percent. the unemployment rate is 8 -