accommodative policies can be smoothly accomplished when appropriate, and fomc participants have spoken publicly about these tools on numerous occasions. indeed, by providing maximum clarity to the public about the methods by which the fomc will exit its highly accommodative policy stance – and thereby helping to anchor inflation expectations – the committee increases its own flexibility to use securities purchases to provide additional accommodation, should conditions warrant. a second policy option for the fomc would be to ease financial conditions through its communication, for example, by modifying its post - meeting statement. as i noted, the statement currently reflects the fomc ’ s anticipation that exceptionally low rates will be warranted “ for an extended period, ” contingent on economic conditions. a step the committee could consider, if conditions called for it, would be to modify the language in the statement to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period than is currently priced in markets. such a change would presumably lower longer - term rates by an amount related to the revision in policy expectations. central banks around the world have used a variety of methods to provide future guidance on rates. for example, in april 2009, the bank of canada committed to maintain a low policy rate until a specific time, namely, the end of the second quarter of 2010, conditional on the inflation outlook. 4 although this approach seemed to work well in canada, committing to keep the policy rate fixed for a specific period carries the risk that market participants may not fully appreciate that any such commitment must ultimately be conditional on how the economy evolves ( as the bank of canada was careful to state ). an alternative communication strategy is for the central bank to explicitly tie its future actions to specific developments in the economy. for example, in march 2001, the bank of japan committed to maintaining its policy rate at zero until japanese consumer prices stabilized or exhibited a year - on - year increase. a potential drawback of using the fomc ’ s post - meeting statement to influence market expectations is that, at least without a more comprehensive framework in place, it may be difficult to convey the committee ’ s policy intentions with sufficient precision and conditionality. the committee will continue to actively review its communication strategy, with the goal of communicating its outlook and policy intentions as clearly as possible. a third option for further monetary policy easing is to lower the rate of interest that the fed pays banks on the reserves they hold with the

that is positive. the high rate of unemployment in the euro area has dampened wage growth. combined with moderate developments in import prices, including energy prices, this is the main reason for the very low inflation at present. nevertheless, the rate of wage increase does seem to be rising a little in germany. higher german wage growth may facilitate the adjustment process in the debt - ridden economies without jeopardising the ecb ’ s inflation target. appreciation of the euro helps to keep import prices at bay. in april, prices rose by only 0. 7 per cent in the euro area. but overall inflation expectations are well - anchored at around 2 per cent, and the ecb does not see any risk of deflation in the euro area. * * * in denmark, economic activity is also picking up, although the growth pattern has been somewhat uneven. combined with frequently large revisions of the figures initially published, the substantial quarter - on - quarter fluctuations in the national accounts mean that these figures are of limited value when it comes to determining the exact cyclical position of the economy. but presumably we must accept that and be careful not to overinterpret growth figures for a single quarter. bis central bankers ’ speeches private consumption has not recovered yet, although the foundation for increased consumption must be said to be in place. the level of private savings has been high for some years. interest rates remain historically low, while real wages are set to rise, partly due to low – but nevertheless positive – inflation. and then there are positive consumer expectations and rising net wealth among households. on the other hand, the gross debt ratio remains high, and some households may have a wish for further consolidation. danmarks nationalbank ’ s most recent projection operates with sound growth in private consumption in the near term – but on the other hand, we have been saying that for some time without the forecast having materialised. the forecast is supported by positive indications in the danish labour market, with falling unemployment and a rise in the number of people in employment, especially in the private sector, although these figures are also subject to uncertainty. unemployment has declined most strongly among unskilled workers and in the building and construction sector. in danmarks nationalbank ’ s view, even a moderate upswing could rapidly cause the labour market to tighten, leading to a shortage of skilled workers and specialists. the first signs of labour shortage are already beginning to emerge in some areas. although the rate of wage increase in denmark is moderate by