They can also incorporate forward-looking elements.8 Indeed, they must to some extent be forward-looking. Hence, forward-looking approaches or forecast-based policies are and should be relevant to central banks. In this context let me stress two aspects which have been discussed at this conference: Our limited knowledge about the expectation formation process and the problem of limited information and limited credibility in financial markets.
The Deutsche Bundesbank’s Markets Department condenses this information and makes it available internally through its daily market reports from New York. The Bundesbank expects the trading desk to strengthen contacts with local banks and institutions. A physical presence on site and a network of contacts will contribute in many respects to a better understanding of financial market developments both in and beyond Japan.