Skip to comments.Forward guidance: making it up as you go along
Posted on 06/25/2014 5:24:10 PM PDT by Lorianne
The banking industry likes superfluous language. There's "quantitative finance" for example, which (given that finance isalready a quantitative subject) is a bit like saying "aerial flight" or "wet swimming".
And then there's "forward guidance". What, as opposed to backward guidance? I mean, what other type of guidance is there?
Last summer the Bank of England (BoE) decided it wanted to import the U.S. Federal Reserve's forward guidance policy. In short this went along the lines of "we'll link future moves in the base rate to other external market indicators, so that as these other indicators move then so will base rates. Thus by keeping an eye on these indicators you will know when to expect interest rates to rise".
(Excerpt) Read more at cnbc.com ...
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