BoE’s Broadbent highlights perils of forward guidance

Ben Broadbent
Ben Broadbent
Bank of England

Central banks can run into trouble if they try to be too predictable, Bank of England deputy governor Ben Broadbent said in a speech today (March 30).

Central banks have often used forward guidance on the path of interest rates as a means of responding to the zero lower bound. Broadbent acknowledged this “can be an advantage”, particularly where there is a risk of deflation.

But he noted the BoE has often had the words of senior officials incorrectly interpreted as a promise to act in a

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