MPC have stressed that their version of Forward Guidance, unlike the original Woodfordian policy to which the term normally refers, is quite different. Unlike the Woodfordian policy, the Bank of England are not communicating that rates would be lower for longer than one would predict based on a normal, historical reading of what the MPC cares about and how it sets about achieving it. There's no change to the MPC reaction function, we are meant to understand. All that FG does is clarify what they were doing anyway.
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Either Forward Guidance IS a change in the…
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MPC have stressed that their version of Forward Guidance, unlike the original Woodfordian policy to which the term normally refers, is quite different. Unlike the Woodfordian policy, the Bank of England are not communicating that rates would be lower for longer than one would predict based on a normal, historical reading of what the MPC cares about and how it sets about achieving it. There's no change to the MPC reaction function, we are meant to understand. All that FG does is clarify what they were doing anyway.