Just seeing the Brazilian central bank coming out with it’s weekly GDP/Inflation forecasts (GDP down to 2.20% from 2.21% from last week), has got me thinking whether forward guidance is worth the paper it’s written on. It certainly hasn’t settled the market down. So should central banks follow Brazil’s lead and go for forecasting and reporting on a weekly basis?
Of course big data points are the life blood of trading, but from a CB’s perspective, would regular updates help sedate expectations or increase them? The market becomes numb very quickly to repetitive comments. Central bankers can only talk the game for so long before the market ignores them and decides its own expectations. Would repetitive hard data do the job that central bank talk can’t?
