Federal Reserve Bank of San Francisco

So, for now, recognizing the uncertainty, examining potential scenarios, and staying focused on restoring price stability and supporting full employment no matter how the economy evolves is optimal communication and appropriate policy.

But offering too much forward guidance in an uncertain world risks conveying a false sense of certainty, reducing rather than improving transparency, and making it harder for the public to clearly predict how the FOMC will react.

With all of this uncertainty, what’s the outlook for monetary policy? There is no single most-likely path. With policy in a good place, we need to remain flexible, able to respond to rapidly evolving risks. Now, this may seem vague, even dissatisfying.

This would amplify the current tradeoffs for monetary policy, making it harder to balance the risks to both sides of our dual mandate.

But if the conflict becomes more protracted, a different scenario is possible. Disruptions in energy supply and associated cost pressures could persist, with increased risks for higher inflation, slower growth, and a weaker labor market.

Under those circumstances, it likely would make sense to look through the temporary rise in energy prices, assuming inflation expectations remain well anchored.

In one, the conflict in the Middle East resolves quickly, oil and energy prices fall, and the impact on the U.S. economy is short-lived and muted.

When uncertainty is elevated, considering scenarios is more useful than debating a modal outlook. Today, there are at least two possible paths for the economy.

Register for our next EERN event: sffed.us/EERN324 Join us 3/24 for a presentation by Nicholas Bloom of @Stanford on firm-level AI use and its impacts on employment and productivity, based on surveys of 5,000+ executives across the US, UK, Germany, and Australia.

WATCH LIVE TODAY: Press conference with #FOMC Chair Powell at 2:30 p.m. ET: federalreserve.gov youtube.com/federalreserve

Today we celebrate the 100th birthday of Alan Greenspan, the 13th chairman of the Federal Reserve, who guided U.S. monetary policy for over 18 years (1987-2006). Appointed by four different presidents, Chairman Greenspan served five terms. During his tenure, Chairman Greenspan navigated the Fed through significant economic events, including the 1987 stock market crash and the aftermath of the 9/11 terrorist attacks. The longest official economic expansion in U.S. history occurred while he was chairman. Join us in honoring the contributions of Chairman Greenspan to the Federal Reserve System and the nation's economic stability. #FedHistory #Greenspan100 #CentralBanking youtube.com/shorts/YHkN5kE…

Here at the Fed, we are rationally exuberant to celebrate your 100th birthday with you. Happy birthday, Alan Greenspan! youtu.be/lp1sJDa5MsI

The economic outlook improved overall, with a higher share of contacts expecting economic activity this year to be similar or slightly stronger than last year.

Retail sales declined slightly, with consumers reportedly pulling back spending following the holiday shopping season, and contacts continued to describe a bifurcated, or K-shaped, economy.

The latest Twelfth District Beige Book reports that economic activity slowed slightly during the January through mid-February reporting period. sffed.us/beigebook

The latest regional indicators for labor markets and prices are available: sffed.us/4k01FCy The San Francisco Fed monitors regional economic indicators to help achieve the Fed system's maximum employment and price stability goals.

The US economy continues to advance at a robust pace. In the latest SF FedViews, Senior Policy Adviser Mark M. Spiegel looks at trends in economic output, the labor market, inflation, and AI—and their implications for monetary policy. sffed.us/4cR7jpG

Two terms that help define how the Fed supports the U.S. economy: easing and tightening. Swipe through to test your Fed knowledge.