Recently the Fed was criticised for talking about tapering and then, when it saw how much the yield curve and asset prices reacted, backing off. The UK's Monetary Policy Committee has likewise been criticised as somehow messing up forward guidance because UK expectations of interest rates price in a rise in rates sooner than is consistent with the MPCs own forecast. Seen through the lens of modern macro, these central bank behaviours are perfectly proper, and don't indicate incompetence, contrary to what you might read in the newspapers.
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Forward guidance: talking about it, changing…
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Recently the Fed was criticised for talking about tapering and then, when it saw how much the yield curve and asset prices reacted, backing off. The UK's Monetary Policy Committee has likewise been criticised as somehow messing up forward guidance because UK expectations of interest rates price in a rise in rates sooner than is consistent with the MPCs own forecast. Seen through the lens of modern macro, these central bank behaviours are perfectly proper, and don't indicate incompetence, contrary to what you might read in the newspapers.