How Big is the Toolbox of a Central Banker? Managing Expectations with Policy-Rate Forecasts : Evidence from Sweden

Some central banks have decided to publish forecasts of their policy rates. Can such forecasts manage market expectations of future policy rates? I use regression analysis on Swedish data to conclude that the answer is yes. The published Riksbank forecasts affect expectations of the future repo rate up to a horizon of approximately a year and a half. However, the response of market expectations to a surprise in the announced repo-rate path is not one-to-one, but is estimated to be less than half of the surprise and decreasing with the forecast horizon

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Year of publication:	2018
Authors:	Åhl, Magnus
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Schweden \| Sweden \| Prognoseverfahren \| Forecasting model \| Geldpolitik \| Monetary policy \| Zentralbank \| Central bank

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