One reply on “Conditional guidance as a response to supply uncertainty”
The BoE is not best pleased that the market has effectively ignored its forward guidance-indeed, the June 2016 short sterling contract is trading around 2%, as against 1.60% the day before guidance was announced on August 7th. Forward guidance is usually conditional, as it has to be for a central bank with an inflation mandate, and the market has responded to the stronger UK data of late rather than to the rhetoric of the BoE. The impact of guidance on other actors in the economy (households, firms) may be important, as argued by carney, but that’s hard to gauge.
One reply on “Conditional guidance as a response to supply uncertainty”
The BoE is not best pleased that the market has effectively ignored its forward guidance-indeed, the June 2016 short sterling contract is trading around 2%, as against 1.60% the day before guidance was announced on August 7th. Forward guidance is usually conditional, as it has to be for a central bank with an inflation mandate, and the market has responded to the stronger UK data of late rather than to the rhetoric of the BoE. The impact of guidance on other actors in the economy (households, firms) may be important, as argued by carney, but that’s hard to gauge.