Q&A: What is 'forward guidance'?

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Mark CarneyImage source, Getty Images
Image caption,

Mr Carney said that his forward guidance policy was "working"

The governor of the Bank of England, Mark Carney, has overhauled his policy of "forward guidance", just six months after it was first implemented.

"Forward guidance" is a tool that Mr Carney has shown a penchant for in his previous job heading Canada's central bank, and that he more-or-less put into immediate action in a statement following the first policy meeting under his stewardship, external.

Mr Carney, and the Bank's Monetary Policy Committee (MPC), delivered explicit guidance regarding the future conduct of monetary policy in August.

But now he has adapted the plan, owing to falling unemployment and an economic recovery in the UK.

What is forward guidance?

What's the point of forward guidance?

Isn't that what Quantitative Easing is supposed to be for?

Then why not just rely on QE?

How did the original version of forward guidance look?

So what has happened since the summer?

Any other chances of any other changes?

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