Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98160
Authors: 
Issing, Otmar
Year of Publication: 
2014
Series/Report no.: 
White Paper Series 16
Abstract: 
In a contribution prepared for the Athens Symposium on 'Banking Union, Monetary Policy and Economic Growth', Otmar Issing describes forward guidance by central banks as the culmination of the idea of guiding expectations by pure communication. In practice, he argues, forward guidance has proved a misguided idea. What is presented as state of the art monetary policy is an example of pretence of knowledge. Forward guidance tries to give the impression of a kind of rule-based monetary policy. De facto, however, it is an overambitious discretionary approach which, to be successful, would need much more (or rather better) information than is currently available. In Issing's view, communication must be clear and honest about the limits of monetary policy in a world of uncertainty.
Subjects: 
central bank communication
monetary policy
forward guidance
Document Type: 
Working Paper

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