Forward guidance refers to central banks

Question

Quizplus · Accepted Answer

Forward guidance is a tool used by central banks to communicate their future monetary policy intentions to the public. It can help shape expectations about future interest rates and inflation, and influence market behavior. Setting long-term interest rates (A) is not typically the role of central banks, as they typically focus on short-term interest rates. Simultaneously reducing unemployment and inflation (C) is a goal of many central banks, but it is not specific to the concept of forward guidance. Engaging in monetary policy to offset the negative side-effects of government fiscal policies (D) is also a broader concept and not specific to forward guidance.

Forward Guidance Refers to Central Banks