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BOE’s Carney Lauds Forward Guidance at ECB Sintra Gathering

BOE’s Carney Lauds Forward Guidance at ECB Sintra Gathering

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Bank of England Governor Mark Carney defended the use of forward guidance by his institution and other central banks, saying the communication strategy is now an important tool for policy makers.

Speaking at the European Central Bank’s summer gathering in Sintra, Portugal, Carney said that forward guidance had been the “biggest innovation in communication” for central banks. By using it, central banks can be “effective in managing expectations as circumstances change,” he said.

Carney brought his signature policy of forward guidance from the Bank of Canada to the BOE in 2013, although he has regularly faced criticism from investors for appearing to backtrack on rate messages.

The Canadian, speaking in the quiet period before the BOE’s decision on Thursday, emphasized that his comments had “no bearing whatsoever” on this week’s announcement, adding they contained “no messages – coded or clarion” on policy.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Lucy Meakin

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