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Analysis-R.I.P. forward guidance: Inflation forces central banks to ditch messaging tool

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Reuters UK

By Sujata Rao and Dhara Ranasinghe LONDON (Reuters) – If the U.S. Federal Reserve killed off forward guidance in June, the European Central Bank may have just hammered the final nail in the coffin of a tool officials had long used to provide monetary policy signals to financial markets. The ECB delivered a half-percentage-point rate hike on Thursday, double what it flagged in June when setting out its policy-tightening plans. It had appeared to change tack earlier this week, when sources told Reuters a bigger rate hike was now under consideration. The switch to what the ECB itself described as…

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