’ s intentions, given its forecasts. the june sep shows that 15 of 19 participants see the first rate increase happening in 2015 or 2016. the path of rates will ultimately depend on the path of the economy, and the committee has said that the first rate increase will not happen until a considerable time has elapsed after asset purchases have been concluded. thus, to the extent the market is pricing in an increase in the federal funds rate in 2014, that implies a stronger economic performance than is forecast either by most fomc participants or by private forecasters. we have made significant strides in communication in recent years. the unemployment and inflation thresholds i discussed earlier, as well as the communication around asset purchases, are all designed to improve public understanding of the committee ’ s intentions. but communications are bound to be imperfect, and changes in the outlook can still lead to adjustments in asset prices. thus, some volatility is unavoidable, and indeed is a necessary part of the process by which markets and the economy adjust to incoming information. the path ahead for monetary policy last week, the chairman provided greater clarity about the path of asset purchases. specifically, the chairman noted that, if incoming data are broadly consistent with the committee ’ s sense of the economic outlook, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year. if the subsequent data remain broadly aligned with the committee ’ s current expectations for the economy, the committee could continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid - year. at that time, the unemployment rate would likely be in the vicinity of 7 percent, with growth consistent with further improvements and inflation heading back toward our objective. if unemployment reaches the 7 percent range, that would constitute a substantial improvement from the 8. 1 percent unemployment rate that prevailed when the committee announced the current program of asset purchases. i want to emphasize the importance of data over date. if the committee ’ s economic outlook is broadly realized, there will likely be a moderation in the pace of purchases later this year. if the performance of the economy is weaker, the committee may delay before moderating purchases or even increase them. if the economy strengthens faster than the committee anticipates, the pace of purchases may be moderated somewhat more quickly. the path of purchases is in no way predetermined ; we will monitor economic data and adjust our purchases as

jerome h powell : thoughts on unconventional monetary policy speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the bipartisan policy center, washington dc, 27 june 2013. * * * views expressed in this speech are mine and may not represent those of the fomc or any of its members. i would like to thank members of the board staff, including james clouse, dan covitz, jon faust, john maggs, raven molloy, karen pence, jeremy rudd, and brad strum. it is great to be back at the bipartisan policy center. i will comment briefly on the outlook for the economy and then turn to monetary policy. near - term outlook our economy has grown at an average annual rate of only about 2 percent since the recovery began exactly four years ago. that modest pace is notably weaker than the experience of past recoveries would have predicted, even accounting for the depth and duration of the great recession. 1 since 2009, the question has been when the recovery will decisively take hold and begin to deliver the higher levels of growth that are needed to put people back to work more quickly. against that background, the federal open market committee ( fomc ) met last week, and, among other tasks, each of the 19 members of the committee submitted individual economic projections for growth, unemployment, and inflation for 2013 through 2015. these forecasts are combined into the summary of economic projections ( sep ), a high - level outline of which was released at the chairman ’ s press conference last week. fomc participants generally expect an acceleration of the recovery through 2013 and 2014 and continued strong growth in 2015. while i make no claim to special forecasting skills, my individual projections are within the so - called central tendency of the projections. of course, the economy has looked to be poised for a breakout several times since 2009, only to disappoint. will this time be different? there are, in my view, good reasons to believe that the economy will continue to gain strength. i would point in particular to the housing sector, which in prior recoveries has been an important engine of growth. for the first two years of the current recovery, housing contributed nothing to growth, as housing investment hovered at extremely low levels. house prices declined sharply through most of 2011, wiping out about half of home equity and restraining consumer spending. but the housing market finally began to recover in early 2012, and that