SWIP: Central banks still face challenges as recovery continues

Forward guidance is all the rage among central banks. The Bank of England (BoE) and European Central Bank (ECB) have joined the US Federal Reserve in an attempt to influence expectations about the future pace of stimulus withdrawal. All three are essentially trying to do two things. Firstly, they are aiming to convince markets that policy will remain loose for some time. Secondly, they are trying to reduce the risk of a sharp correction in bond markets, which may be uncertain about the timing and impact of this new policy phase. For the BoE, this marks a significant change in the w...