The potential advantages of such disclosure could lie in an increased predictability of monetary policy, which should ultimately enhance the policy’s effectiveness due to a stronger effect on expectations. The most far-reaching approach is taken by a few central banks that communicate a quantified future own interest rate path (and the uncertainty surrounding it).
With regard to the latter, the “own instrument projection” is supposed to be the interest rate path that is best able to achieve the central bank’s objectives under certain model and judgement-based assumptions concerning the functioning of the economy. This approach has the property of being fully consistent with the central bank’s targets and other inputs. However, it also entails several problems.