Forward guidance refers to statements by central banks about their future intentions of policy targets such as interest rates, inflation or economic growth, in order to provide guidance to market participants on how the central bank is likely to react to future economic developments.

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Forward Guidance Is

Question 73

Multiple Choice

Forward guidance is:

A) statements today about policy targets in the future.
B) expansion of the supply of aggregate reserves beyond the amount needed to maintain the policy rate target.
C) asset purchases that shift the composition of the Fed's balance sheet.
D) statements of policy changes and dates those changes will take effect.

Correct Answer: