Uncertainty over monetary policy is ‘recessionary’, researchers say

Forward guidance reduces uncertainty and supports the economy, paper finds


Uncertainty over monetary policy has recessionary effects on the economy, and the effects are stronger in easing cycles than in tightening cycles, a Bank of Canada staff working paper finds.

Tatjana Dahlhaus and Tatevik Sekhposyan treat uncertainty as the predictability of policy, measured by the accuracy of the Blue Chip Financial Forecasts for the federal funds rate. They also consider a measure based on “surprise”, when the forecasters update their figures after Fed committee announcements.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account