A Market Without Forward Guidance

The report analyzes the potential transition of monetary policy away from explicit forward guidance toward a data-reactive market environment. It highlights the historical role of forward guidance as both a volatility anchor and a potential source of amplification during crises.

Key Takeaways

• 1.Forward guidance has historically compressed market rate volatility during stable periods but can amplify volatility during sudden inflation shocks.
• 2.Moving away from forward guidance is expected to increase market volatility and near-term policy surprises while potentially reducing systematic central bank errors.

Table of Contents

• Macro Picture - Chart Story
• A version of central banking long forgotten
• Disclaimer

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