First, as the statement notes, the committee views its current low rate policy as likely to be appropriate at least until the specified thresholds are met. Reaching one of those thresholds, however, will not automatically trigger immediate reduction in policy accommodation... Ultimately, in deciding when and how quickly to reduce policy accommodation, the committee will follow a balanced approach in seeking to mitigate deviations of inflation from its longer-run 2 percent goal and deviations of employment from its estimated maximum level.
Second, the committee recognizes that no single indicator provides a complete assessment of the state of the labor market and, therefore, will consider changes in the unemployment rate within the broader context of labor market conditions. For example, in evaluating a given decline in the unemployment rate, the committee will also take into account the extent to which that decline was associated with increases in employment and hours worked as opposed to, say, increases in the number of discouraged workers and falling labor force participation. The committee will also consider whether the improvement in the unemployment rate appears sustainable.
Third, the committee chose to express the inflation threshold in terms of projected inflation between one and two years ahead, rather than in terms of current inflation. The committee took this approach to make clear that it intends to look through purely transitory fluctuations in inflation, such as those induced by short-term variations in the prices of internationally traded commodities and to focus instead on the underlying inflation trend.
In making its collective judgment about the underlying inflation trend, the committee will consider a variety of indicators, including measures such as median, true mean, and core inflation, the views of outside forecasters, and the predictions of econometric and statistical models of inflation. Also, the committee will pay close attention to measures of inflation expectations to ensure that those expectations remain well anchored.
Finally, the committee will continue to monitor a wide range of information on economic and financial developments to ensure that policies conducted in a manner consistent with our dual mandate.