The Fed and Bank of England experiments with quantitative forward guidance could probably be classified as failures. Both targeted unemployment but rapid and unexpected falls in the unemployment rate in the UK and US caused a communication headache. Reuters looks at how officials are moving towards a more artful approach:
[The BOE] promised to keep rates low at least until the unemployment rate fell below 7 percent, predicting that would take three years. It took six months.
Alan Greenspan has a great line warning against committing to forecasts: “Remember, we don’t forecast very well,” he said in a rare show of humility.
