Additional Tools at the Zero Lower Bound - Forward Guidance
3 important questions on Additional Tools at the Zero Lower Bound - Forward Guidance
What does the Fed do to influence market expectations?
Future policy intentions are signaled to shape behavior before changes occur.
Give an example of what the Fed might announce regarding rates.
An announcement might state that rates will stay low for an extended period.
How does Fed signaling affect investor and borrower behavior?
It shapes investor and borrower behavior even before policy changes happen.
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