In the end, this may complicate the preservation of price stability. As part of their communication strategy, many central banks have decided to publish their forecasts in order to increase transparency. In a forwardlooking environment, fostering transparency by means of published forecasts is more than an end in itself.
It also serves to guide expectations of future monetary policy actions, thus making the central bank more effective in fulfilling its duties. For this reason, the quality of the forecasts is crucial not only under reputation aspects but also for reasons of policy effectiveness. As a result, central banks have a natural interest in applying the best forecasting methods available.