Fed's Musalem: Well-Articulated Framework Should Include Two Or Three Likely Scenarios

C.Bankers Should Tell The Public How And Why Central Bank Makes Policy Decisions - C.Banks Should Also Avoid 'Exiting The Conversation Altogether,' Would Pose Risks In Terms Of Inflation - C.Banks Should Avoid Communications And Actions With No Framework To Make Sense Of Them - A C.Bank That Keeps Its Framework To Itself Forces Market Participants To Guess At Its Reaction, Rather Than Focusing On Data - Communicating Framework Makes Policy More Effective, Lowers Costs For Households And Businesses - The 'Hall Of Mirrors' Occurs When Fed Announces A Forecast, Not A Framework - Market Guess 'Adds Noise,' And Results In Higher And More Volatile Interest Rates And Financing Costs For Businesses And Households - Delegated Power Over Interest Rates Also Obligates The Fed Too Explain 'How And Why That Power Is Used' - A Well-Communicated Framework Also Guards Against Inflationary And Deflationary Spirals - If The Public Understands The Framework, Private Expectations Line Up With The Fed's Intentions, Improves Trade-Offs Between Inflation And Employment - A Predictable, Explained Framework, Is Part Of What Makes A Central Bank Democratically Legitimate