Forward guidance: a new challenge for central banks

  • n a contribution prepared for the Athens Symposium on “Banking Union, Monetary Policy and Economic Growth”, Otmar Issing describes forward guidance by central banks as the culmination of the idea of guiding expectations by pure communication. In practice, he argues, forward guidance has proved a misguided idea. What is presented as state of the art monetary policy is an example of pretence of knowledge. Forward guidance tries to give the impression of a kind of rule-based monetary policy. De facto, however, it is an overambitious discretionary approach which, to be successful, would need much more (or rather better) information than is currently available. In Issing's view, communication must be clear and honest about the limits of monetary policy in a world of uncertainty.

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Author:Otmar IssingGND
Parent Title (English):SAFE white paper series ; 16
Series (Serial Number):SAFE white paper series (16)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Date of Publication (online):2014/06/25
Date of first Publication:2014/06/25
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2014/06/30
Tag:central bank communication; forward guidance; monetary policy
Page Number:15
Last Page:13
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht