, as it is essential for fulfilling the mandate that they themselves have defined. the distributional consequences of monetary policy, if there are any, and other risks such as moral hazard and financial stability, must be addressed by other tools. these include fiscal policies, macroprudential policies and banking supervision – policies that are more targeted and therefore inherently more appropriate for close scrutiny by legislators. faced with future crises, central banks will adhere to their mandates and use their independence to fulfil them. in our case, the ruling of the european court of justice has shown that we can use all the tools within our mandate to tackle future challenges to price stability. we cannot foresee now what those challenges might be, but if and when they arise, they may require us to adjust our policy space once more to meet our mandate. the instruments we deploy in such conditions, and the safeguards that accompany them, will be commensurate with the nature of the challenges we face. and it is crucial that we are at all times transparent and accountable in our actions. 1 see kydland, f. and prescott, e. ( 1977 ), “ rules rather than discretion : the inconsistency of optimal plans ”, journal of political economy, 85 ( 3 ), 473 – 491 and barro, r. and gordon, d. ( 1983 ), “ rules, discretion and reputation in a model of monetary policy ", journal of monetary economics, vol. 12, no 1, pp. 101 – 121. 2 see davis, j. ( 2012 ), “ inflation expectations have become more anchored over time ”, economic letter, dallas fed, vol. 7, no 13. 3 alesina, a. and summers, l. ( 1993 ), “ central bank independence and macroeconomic performance : some comparative evidence ”, journal of money, credit and banking, 25 ( 2 ), pp. 151 – 162. 4 see, among many others, cukierman, a., webb, s., and b. neyapti ( 1992 ), “ measuring the independence of central banks and its effect on policy outcomes ”, the world bank economic review, 6 ( 3 ) : 353 – 398 ; berger, h. and de haan, j. and s. eijffinger ( 2001 ), “ central bank independence : an update of theory and evidence ”, journal of economic surveys, 15 ( 1 ) : 3 - 40

jerome h powell : communications challenges and quantitative easing speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the 2013 institute of international finance annual membership meeting, washington dc, 11 october 2013. * * * it is an honor to be here today with such distinguished panelists to discuss the communications challenges associated with quantitative easing. i should say at the outset that the views i express here today are my own and may not reflect those of other federal open market committee ( fomc ) members. i'll start with the fomc's commitment, when the current asset purchase program was launched in september 2012, to continue purchases until the committee sees a substantial improvement in the outlook for the labor market, a term the committee left undefined. 1 this commitment was powerful precisely because it was open ended. but “ open ended ” does not mean unending. as time passed and labor market conditions improved, it would be important for the committee to clarify the meaning of the term substantial improvement. and given the lack of precedent, it was likely that this transition to more - specific guidance would involve some short - run volatility. economic conditions have improved since the program was launched. consumer and business confidence moved higher, and sectors such as housing and autos have performed well. despite strong, ongoing headwinds from fiscal policy, there has been significant progress in the labor market. from september 2012 through august of this year, the private sector created 2. 3 million new jobs. the unemployment rate declined from 8. 1 percent to 7. 3 percent. it ’ s unclear how much of this improvement was due to the program, but i think there is evidence that it played a role, lowering long - term interest rates and raising equity prices and home prices, effects that have supported household and business spending. in march 2013, the committee began noting in its postmeeting statement that it would consider “ the extent of progress toward its economic objectives ” in judging “ the size, pace, and composition of its asset purchases. ” 2 in late may, the chairman stated, in response to a question during a congressional hearing, that the committee might begin to reduce the pace of asset purchases “ over the next few meetings. ” 3 a few weeks later, at his press conference after the june 2013 fomc meeting, the chairman noted that the substantial improvement test might well be met over the coming year, and he therefore set forth a framework designed to clarify the