Embracing uncertainty in monetary policymaking

Abstract The economy is complex and the range of factors contributing to uncertainty has risen. Rather than shy away from uncertainty, monetary policymakers need to embrace it by incorporating uncertainty into their policymaking framework. In practice, this means policymakers should: prepare for different economic futures by incorporating plausible alternative scenarios into their policy analysis; ensure policy is more nimble, robust, and systematic; and be more transparent, not less, but communicate more effectively.