The key difference between the two approaches is, hence, the level of precision with which policymakers are willing to communicate their future policy inclinations. The first approach is by no means uncharted territory in the central banking community.
A number of pioneering central banks, led by the Reserve Bank of New Zealand in 1997, regularly publish numerical interest rate forecasts to reinforce their inflation targeting commitment, very much in line with modern monetary theory.15 The experience of these central banks shows that there have been many instances where guidance on the future path has been successful in coordinating disperse market views.16 But 6 / 11  BIS central bankers' speeches  there have also been instances of stark and persistent discrepancies between the path expected by market participants and that published by policymakers.17 Some academics have resolved this impasse by arguing that the optimal degree of transparency depends on the central bank’s ability to forecast the economy.