##omc post - meeting statement began to include more direct, but still qualitative, forward guidance regarding the future path of the federal funds rate. 5 notably, this forward guidance did not reference explicit outcomes or specific timelines that would guide the fomc's future policy decisions. evidence suggests that the shift toward more transparent communication by the fomc in the early 2000s, including its use of forward guidance, allowed financial market participants to better anticipate changes in the stance of monetary policy, which were then reflected in broader financial conditions. 6 the 2008 financial crisis significantly altered most assessments of the costs and benefits of providing more explicit forward guidance. with the federal funds rate remaining at near - zero levels for several years after that crisis, the committee had to look for new tools to change its policy stance and affect financial conditions. explicit forward guidance and large - scale asset purchases quickly emerged as the two main new tools of monetary policy. in a way, explicit forward guidance was seen as providing monetary policy accommodation when the current setting of the federal funds rate could not. 7 by providing guidance on specific outcomes that would need to be achieved before the fomc would consider raising the target range for the federal funds rate, the committee could help reduce uncertainty regarding its future policy decisions and keep longer - term interest rates low as the economic recovery progressed. 8 in addition, with the risks to the outlook generally seen as tilted to the downside in the years that followed the financial crisis, using explicit forward guidance to signal a " low for longer " policy was not seen as posing significant risks to the committee's credibility, because short - term interest rates were generally expected to remain unusually low during those years. i should note, however, that even then, low - for - long policies did raise some financial stability concerns, such as those related to reach - for - yield behavior. in addition, the outcome - based forward guidance employed by the fomc in the years following the financial crisis explicitly recognized the possibility that inflationary pressures could emerge. it incorporated a version of an " escape clause " in its forward guidance that would prompt a reconsideration of the policy stance should such inflationary pressures emerge. in particular, in its december 2012 statement, the committee noted that it expected the target range for the federal funds rate to remain at 0 to 1 / 4 percent for " at least as long as the unemployment rate remains above 6 - 1 / 2 percent, inflation between one and two years ahead is

have hit the stock market hard since last fall, and declines in equity wealth could begin to show through more forcefully to consumption spending. all in all, i think it is too early to have a strong conviction that the economy is reaching the end of this period of quite slow growth. as the fomc noted yesterday, the risks remain toward economic weakness. conclusion our announcement yesterday was part of an ongoing effort to communicate with the public at large and with markets. this desire to be transparent has led, in the last several years, to numerous changes in the procedures of many central banks. i do not know what future changes, if any, might be called for, but i am confident that central banks will continue to look for ways to make certain that their objectives and policies are clear. thank you for your attention.