Mickey Levy, Monday, November 3, 2014 - 00:00
David Miles, Wednesday, October 22, 2014 - 00:00
Marcus Miller, Lei Zhang, Wednesday, September 10, 2014 - 00:00
Richard Barwell, Jagjit Chadha, Sunday, August 31, 2014 - 00:00
In the wake of the crisis, forward guidance has become a prominent tool of monetary policy. This column argues that central banks should go a step further, communicating to the public the internal policy debate that goes into monetary policy formation – especially regarding uncertainty. Since policy is determined contingent on a range of possible outcomes, forward guidance would become more effective by explicitly communicating how policy would respond along this uncertain path.
Masazumi Hattori, Andreas Schrimpf, Vladyslav Sushko, Sunday, November 17, 2013 - 00:00
This column argues that asset purchases and forward guidance by central banks can be effective in reducing financial market participants’ tail-risk perceptions. US data suggest that, since their inception in 2008, the unconventional policies adopted by the Federal Reserve have significantly compressed perceptions of tail risk. Despite increases in risk premia during the recent ‘tapering’ episode, estimates of tail-risk perceptions still remain significantly below the levels observed when the measures were introduced. Still, the effects of exit on tail-risk perceptions remain uncertain, and will require careful monitoring.
Wouter den Haan, Wednesday, October 23, 2013 - 00:00
Forward guidance is the practice of communicating the future path of monetary policy instruments. This column introduces a new eBook on the subject that collects the views of central bankers from the Fed, ECB, Bank of Japan, and Bank of England together with those of scholars and market participants. Forward guidance could be the key to unwinding massive central-bank balance sheets without severe disruptions.
John C. Williams, Wednesday, October 16, 2013 - 00:00
The Federal Open Market Committee has used various forms of forward guidance to influence the views of businesses, investors and households about where monetary policy is likely to be headed. This column by the President of the San Francisco Fed presents his views on the benefits, limitations and future role of forward policy guidance.
Biagio Bossone, Saturday, October 5, 2013 - 00:00
So-called ‘helicopter money’ policies – those in which government spending or transfers to households are paid for by printing money – involve both monetary and fiscal policy. This means they require extraordinary cooperation between the government and the central bank, which potentially undermines central-bank independence. However, emergency policies of this type may be justified during extreme systemic crises. Injections of helicopter money can increase net wealth and thus stimulate spending, and this mechanism is particularly important when conventional monetary policy is stuck at the zero lower bound.
Spencer Dale, James Talbot, Friday, September 13, 2013 - 00:00
The Bank of England’s Monetary Policy Committee has recently provided some explicit forward guidance regarding the future conduct of monetary policy in the UK. This column by the Bank's Chief economist explains how the MPC designed its forward guidance to respond to the unprecedented challenges facing the UK economy and argues that forward guidance allows the MPC to explore the scope for economic expansion without putting price and financial stability at risk.
Peter Praet, Tuesday, August 6, 2013 - 00:00
The ECB recently changed its monetary policy communication strategy to include a form of forward guidance. This column, written by ECB Executive Board Member Peter Praet, explains the new thinking and argues that it has contributed to more clarity over the ECB’s assessment of the outlook and its reaction function as well as helping to stabilise money-market conditions and anchor expectations more firmly.