or sustainable, growth rate. the acceleration in productivity growth in the united states in the late 1990s, for example, led us to revise our estimates of how fast the economy was likely to be able to grow at that time without undermining price stability. we also face considerable ignorance about the precise channels through which policy actions ultimately affect the economy, as well as how long those effects will take to show up and how large they will be when they do show up. as you would expect, this makes it difficult to assess in advance, or even in real time, the amount of loosening or tightening that is likely to be necessary to achieve the goals of central banks. even if we had precise knowledge of key economic relationships, our ability to assess economic conditions in real time would be impeded by data limitations. though most modern central banks implicitly or explicitly target some measure of inflation, the host of issues surrounding the proper definition and measurement of inflation for policy purposes is daunting. in general, most economic data are subject to sampling error and so cannot simply be taken at face value. also, many of the series we rely on are subject to revision as more or better information becomes available, and potentially can even be redefined in a way that makes the history of the series less useful for interpreting current movements. finally, data are often reported with a significant enough delay to limit their use as a read on current conditions. but, even if we knew the model and data with certainty, it is impossible to perfectly predict the evolution of factors that are largely beyond the influence of current monetary policy but that would likely affect our policy today if we knew for sure how they would look tomorrow. one way to say this is that we simply cannot know what types of " shocks " are likely to hit the economy or when they will hit. and even as they impact the economy, the appropriate policy response may not be obvious because it may be difficult to assess in real time the probable duration of the shock and whether it is demand driven or supply driven. even at a one - year horizon, which for policy purposes is not a very long time, there is considerable uncertainty surrounding forecasts of gdp growth. for example, the survey of professional forecasters reports that on average 50 economists attach a 90 percent probability to an outcome for real gdp growth for 2007 that ranges from 1. 0 percent to 5. 0 percent. the width of this band of confidence or uncertainty is similar to that in the published forecasts of

and greater disclosure and transparency. the central banks that publish quantitative forecasts for growth and inflation now typically show the confidence bands around their forecasts. in some cases, these forecasts use, as a conditioning assumption, financial market expectations for the path of short - term interest rates. in others, the central bank publishes a forecast that includes the central bank's assessment at that time of the likely path of monetary policy over some horizon. in the former case, the implications of the forecast for monetary policy are left implicit. in the latter case, the likely path of monetary policy is made explicit, but that path is heavily qualified or conditioned to make it clear that that expected path of short - term interest rates will change as conditions change. the fomc's approach to communication differs in interesting and important ways from these other models. although the committee has introduced a gradual but marked increase in the degree of communication over the past two decades, it provides information about its forecast in quantitative terms less frequently and with less detail than has become typical of many other central banks. and yet, because of the unique circumstances over the past two to three years, it has provided more information about the near - term path for monetary policy than has been the practice of many of our counterparts. these differences in approaches to communication do not seem to reflect fundamental differences in perceptions of the degree or nature of uncertainty. the proponents of the regimes with the most explicit forecasts and greater disclosure about the future path of interest rates do not claim to have greater confidence in their ability to forecast. they do express, however, greater comfort with some of the potentially adverse consequences of such approaches, the tendency, for example, for observers to gravitate toward the central tendency of the forecast and to look past the uncertainty bands and qualifications. and they express less concern that these approaches to communication will end up limiting the flexibility of central banks to react as circumstances change without inducing damaging volatility into markets. and so, even as central banks have moved in varying degrees toward greater clarity about their goals, forecasts and policy decisions, they have also moved to being more explicit about uncertainty and about the need for flexibility in how policy should adjust over time. this reflects an evolving appreciation that there are limits to transparency. transparency in monetary policy cannot mean that the central bank conveys more confidence in the outlook for growth and inflation than it can reasonably have, and it cannot provide more assurance about the likely future course of policy than it actually has. this seems