By being honest about the extent of our uncertainty, and by not offering false certainty, we managed to shift some of the uncertainty off our plate and put it back into markets. This is a positive and important development because routine guidance also comes with a cost—it suppresses the natural signalling role of financial markets.
When market participants pay attention only to the words we say about future policy and begin to discount the flow of actual economic data, they set up a oneway bet in markets.22 Market prices cease acting as a check for our own projections.