However, the key difference between the earlier episodes and the recent one is the pair of commodities involved. Earlier, it was cereals and sugar, now it is proteins and fruits and vegetables. Second, when prices are rising because demand is growing strongly while supply stagnates or fails to keep up, there is no alternative to curbing food inflation than raising supply rapidly.
In other words, there is a signalling channel inherent in asset purchases, which reinforces the credibility of the forward guidance on policy rates via the expectations channel. Conversely, forward guidance may affect the term premium component of longer-term yields by reducing the uncertainty about the future path of short-term interest rates and thereby reducing duration risk in the market.