Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241206 
Year of Publication: 
2020
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2020-40
Publisher: 
Bank of Canada, Ottawa
Abstract: 
How forward guidance influences expectations is not yet fully understood. To study this issue, I construct central bank data that includes forward guidance and its attributes, central bank projections, and quantitative easing, which I combine with survey data. I find that, in response to a change in forward guidance, forecasters revise their interest rate forecasts in the intended direction by five basis points on average. The effect is not attributable to central bank information effects. Instead, when forming rate expectations, forecasters place full weight on their own inflation and growth forecasts and zero weight on those of the central bank.
Subjects: 
Central bank research
Monetary policy
Monetary policy communications
Transmission of monetary policy
JEL: 
D83
D84
E37
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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