Publishing FOMC economic forecasts

Given the time lag between a monetary policy action and its effect on the economy, the importance of considering economic forecasts in the conduct of policy has long been acknowledged. Still, it is only over the past decade or so that the publication of central bank economic forecasts has been widely recognized as a potentially useful tool for monetary policy communication. As a result, many central banks have begun to express their views about the likely future path of the economy more openly (in line with a general trend toward greater central bank transparency). ; Last November, the Federal Open Market Committee (FOMC), which sets U.S. monetary policy, announced new procedures for publishing expanded and more frequent FOMC economic forecasts. This Economic Letter describes this new communications initiative.