BIS paper finds trade-off in forward guidance
Forward guidance may deter economic growth, authors say
Forward guidance may leverage the optimism of some forecasters but it might also come at a cost if treated as a signal of deteriorating outlook, finds a paper co-authored by the head of economic analysis at the Bank of International Settlements, Benoît Mojon.
The researchers use the Survey of Professional Forecasters to analyse the signals that passed through to expectations when the Fed announced that rates were expected to remain low during the period of Q3 2011 to Q4 2012.
The authors aim
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