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|Abstract:||Central banks use forward guidance to steer market expectations of future monetary policy moves. At the same time, they rely on market prices to gauge the likely path of the economy and the appropriate stance of monetary policy. This two-way flow between market prices and forward guidance can create a circularity. Market signals may be rendered less informative when the central bank heeds market signals in formulating forward guidance, as those market signals reflect the diminished weight placed by market participants on their private signals.|
|Citation:||Morris, Stephen, Shin, Hyun Song. (2018). Central Bank Forward Guidance and the Signal Value of Market Prices. AEA PAPERS AND PROCEEDINGS, 108 (572 - 577. doi:10.1257/pandp.20181081|
|Pages:||572 - 577|
|Type of Material:||Journal Article|
|Journal/Proceeding Title:||AEA PAPERS AND PROCEEDINGS|
|Version:||Final published version. Article is made available in OAR by the publisher's permission or policy.|
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