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Gauging The Effectiveness Of Quantitative Forward Guidance: Evidence From Three Inflation Targeters

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Executive Summary

This paper conducts a comparative analysis of the performances of the forward guidance strategies adopted by the Reserve Bank of New Zealand, the Norges Bank and the Riksbank, with the aim to gauge whether forward guidance via publication of an own interest rate path enhances a central bank's ability to steer market expectations. The perceived primary advantage of publishing an own interest rate path is that it would enhance the central banks ability to steer expectations, thereby enhancing the predictability of monetary policy, the anchoring of inflation expectations and the leverage of monetary policy over longer term interest rates.

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