7 The adoption of thresholds was a clear change to data-based guidance, as its principal sponsors had frequently urged. 8 The point was not to provide additional stimulus at the time of adoption, but rather to allow market participants to adjust their expectations about future monetary policy in response to incoming data – exactly what the authors advocate.
I very much welcome these developments. Coming from a prolonged period of setbacks and deflation risks, this is good news. These developments in market perceptions of inflation also have important implications for monetary policy as they affect financing conditions – these are the conditions for people and businesses to finance their investments.