In hindsight I'd have to admit the fact we were able in our statements to give some [clue] of where policy was headed has turned out to be helpful...up to this point.  It's helped financial markets and others be prepared for, and adjust smoothly, to what we've done so far...It's probably reduced volatility in financial markets around the time of our policy actions.

Most recently, the Committee has introduced additional commentary on the outlook for policy into its statement. For example, the August 2003 statement of the FOMC indicated that "policy accommodation can be maintained for a considerable period," a formulation replaced a few meetings later with the comment that the Committee could be "patient" in removing policy accommodation. These statements conveyed information to markets about the Committee's economic outlook as well as its policy approach. .. The language of the statement in August 2003 and subsequent meetings persuaded the markets that an autumn tightening was not in the cards, and market expectations adjusted accordingly. Crucially, this change in expectations resulted in lower interest rates at all maturities, a development that helped support the expansion in the latter part of last year.

When the policy tightening cycle finally began earlier this year, the FOMC indicated that, with underlying inflation still relatively low, it would proceed "at a pace that is likely to be measured." As I discussed in a speech in May, the gradualist approach implied by this statement is often appropriate during a period of economic and financial uncertainty (Bernanke, 2004). At the same time that it provided information on its outlook and its expected policy path, however, the Committee properly insisted that its policies would be conditional on the arriving economic data. In particular, the Committee noted that it would respond as necessary to maintain price stability.

In 2000, the FOMC switched from the “tilt” language to the balance-of-risks language with the explicit intent to avoid signaling future policy actions.  Nevertheless, in August 2003 the Committee added a statement that was intended to give the public some idea of how it believed policy might proceed in the near future.

In the United States, the August 2003 statement of the Federal Open Market Committee that "policy accommodation can be maintained for a considerable period" is another example of commitment. The close association of this statement with the Committee's expressed concerns about "unwelcome disinflation" implied that this commitment was conditioned on the assessment of the economy. The conditional nature of the commitment was sharpened in the Committee's December statement, which explicitly linked continuing policy accommodation to the low level of inflation and the slack in resource use.