From an empirical point of view, it is certainly too early to reach a definitive conclusion regarding the overall costs and benefits of this approach. However, existing empirical analysis does not indicate that this approach delivers an uniquely superior predictability of monetary policy outcomes. As regards forward guidance, I prefer the approach of “letting the strategy speak for itself”.
In my view the most beneficial role of communication in fostering monetary policy effectiveness lies in improving medium-term to long-term predictability and credibility. And here, our explicit strategy must play the central role.