How do central bank projections and forward guidance influence private-sector forecasts?

by Monica Jain and Christopher S. Sutherland

We construct a 23-country panel data set to consider the effect of central bank projections and forward guidance on private-sector forecast disagreement. We find that central bank projections and forward guidance matter mainly for private-sector forecast disagreement surrounding upcoming policy rate decisions and matter less for private-sector macroeconomic forecasts. Further, neither central banks' provision of policy rate path projections nor their choice of policy rate assumption used in their macroeconomic projections appear to matter much for private-sector forecast disagreement.

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Year of publication:	January 2018
Authors:	Jain, Monica ; Sutherland, Christopher S.
Publisher:	[Ottawa] : Bank of Canada
Subject:	Transmission of monetary policy \| Central bank research \| Inflation targets \| Monetary policy \| Monetary policy communications \| Geldpolitik \| Zentralbank \| Central bank \| Inflationssteuerung \| Inflation targeting \| Politische Kommunikation \| Political communication \| Wirkungsanalyse \| Impact assessment