‘Forward guidance’ had a poor start in life. It was born as a pleonasm – afflicted with a severe case of redundancy. ‘Guidance’ would have sufficed, as all guidance relates to the future and is therefore inevitably forward. Perhaps some idiosyncratic historians call their subject ‘backward guidance’, and maybe the odd tourist has signed up for instantaneous or simultaneous guidance around some ancient site, but we doubt it. Redundancy as a rhetorical device tends to be used when it is deemed desirable to inflate the importance of someone or something beyond what is fundamentally warranted. Our view is that this also is the case with forward guidance.
That’s the opening to Willem Buiter’s enticingly aggressive and highly readable 17-page note, available ungated at this link. Read more
Greg Fuzesi is quietly fuming. We get a post-holiday presser from Mario Draghi on Thursday and the JP Morgan economist really would like the ECB chief to use the opportunity to expand upon the word “extended” when offering interest rate guidance. Read more
Have a chart from HSBC which, once the key is provided, will explain sterling’s weakness, probably:
Before we get there though we should touch back on Carney’s forward guidance thing, of which there are numerous different takes. Here are three for the hell of it: Read more
This is really good stuff from the FT’s Michael Steen, summing up the confusing welter of communications that has bubbled from ECB board and council members since Mario Draghi attempted some light forward guidance at the last ECB press conference:
During his press conference on the subject, the ECB chief did his best not to define that extended period but became unstuck when asked if it was six or 12 months, replying: “It is not six months, it is not 12 months, it is an extended period of time.”
Here’s the moment, on Reuters Video on Tuesday (03:54 on the countdown clock) , when Germany’s Asmussen said… Read more