Quantitative or Qualitative Forward Guidance: Does it Matter?*

Abstract

Every monetary policy decision by the Reserve Bank of New Zealand (RBNZ) is accompanied by a written statement about the state of the economy and the policy outlook, but only every second decision by a published interest rate forecast. We exploit this difference to study the relative influences of qualitative and quantitative forward guidance. We find that announcements that include an interest rate forecast and announcements that only include written statements lead to very similar market reactions across the yield curve. Our results imply that central bank communication is important, but that the exact form of that communication is less critical.