Clarifying the reaction function For such a data-dependent approach to be effective and avoid exacerbating uncertainty, we need to give some guidance on our future policy. Although we should avoid giving unconditional forward guidance on  the policy rate path many months ahead, a meeting-by-meeting approach alone may not suffice.
It may leave investors in the dark, having to guess our future moves and focusing on the near term[21]. To deal with this conundrum, we must instead provide investors with a framework for how we evaluate and respond to the incoming information. In other words, we need to clarify our reaction function.