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Broadbent highlights: Views on CB communication

  • Broadbent speech concluded - nothing immediately market moving. He makes the point that he doesn't set interest rates in the future, so there's not much point in him committing to a rate path (like the Riksbank/Norges Bank) as there are bigger risks than benefits (1: that the market doesn't fully understand the conditionality of the forecast. 2: That it would be hard to pin down with 9 members in a democratic format).
  • He also says that if central banks overcommunicate then markets pay too much attention to CBer's comments and not enough attention to the economic data - and it is the economic data that should be guiding markets not CB speeches.
  • The final pullout point is that he thinks that CBs don't need to steer guidance over for the next meeting. If something changes and it is appropriate to change/not change policy then having to have communicated that to the market previously only slows down the CB's ability to act fast.
  • So all in all, he was making the point markets should pay more attention to economic data and possibly central bankers should speak less!

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