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Forward guidance and the private forecast disagreement – case of Poland

Author

Listed:
  • Jakub Rybacki

    (SGH Warsaw School of Economics, Collegium of Economic Analysis)

Abstract
During the period of policy easing in 2013 and prospective tightening in 2017−2019, Narodowy Bank Polski (NBP) applied forward guidance to manage the expectations of market participants. The goal of the policy was to lower the uncertainty related to the future interest rate decisions. We attempt to verify whether the central bank’s communication indeed reduced disagreement, based on the professional forecasters’ survey. We found that the forward guidance introduced in 2013 lowered the perceived interest rate risk. Abandoning the policy in 2014 increased the disagreement in a disproportionately large manner. The reintroduction of the policy in 2017 again allowed to reduce uncertainty. However, it took a year to strengthen its impact. The policy likely prevented an increase of disagreement during the NBP image crisis in late 2018. Our research highlights that it is relatively easy to lose confidence with ill-considered communication, but building credibility requires systematic long work.

Suggested Citation

  • Jakub Rybacki, 2019. "Forward guidance and the private forecast disagreement – case of Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 50(4), pages 411-428.
    • Handle: RePEc:nbp:nbpbik:v:50:y:2019:i:4:p:311-428
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    forward guidance; density forecasts; survey of professional forecasters;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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