Rather, “they need to reintroduce true two-way risk, so that asset prices again reflect underlying fundamentals … Central bankers need to communicate more clearly how they think about risks and opportunities in the economy and financial markets, and then let private investors decide the balance of risks and reward for themselves.” Other critics have focused on the usefulness of forward guidance.
Charles Goodhart, for example has been skeptical of its usefulness, particularly over longer horizons, where guidance is most needed. Specifying paths is only as good as the forecasts upon which they are based. His research shows that while central bank forecasts are very good up to two quarters ahead, they are “dire” at longer time horizons.