3 Accordingly, a number of companies have stopped providing earnings guidance, with research finding that these companies do see a subsequent increase in analyst forecast dispersion and a decrease in forecast accuracy – but no change in actual market volatility. 4 Is central bank communication different? First and foremost, central banks pursue transparency to be accountable in democratic societies.
Moreover, research and experience demonstrate that clear and open communications also enhance the effectiveness of monetary policy. In particular, successful monetary policy requires transparency around two aspects of the policy approach – what we are trying to achieve and how we go about achieving it.