“Forward guidance, like everything in economics, has benefits and costs,”

A complicating factor was that the Fed had made clear promises to markets about how it would remove support for the economy, which made adjusting quickly more difficult.

Fed Confronts Why It May Have Acted Too Slowly on Inflation

Jeanna Smialek MYT 10 May 2022

https://www.nytimes.com/2022/05/10/business/economy/federal-reserve-inflation.html

Centralbanker skall INTE vara förutsägbara

Det är inte bra att aktörerna känner sig säkra. Det gör dem bara med oförsiktiga.

Today’s market participants are babied with excessively explicit “forward guidance”, supported by historically low interest rates and yields (especially in real terms) and central bank purchases of securities if markets weaken.

Such a “safety net” makes investors and traders so complacent they panic at any hint of normalised yield curves and real interest rates, as occurred in bond markets when chairman Ben Bernanke dared mention “tapering” in May 2013 and today’s downturn in emerging markets.

Denna blogg 13 februari 2014

https://englundmacro.blogspot.com/2014/02/centralbanker-skall-inte-vara.html