There are 3 types of forward guidance statement..

Never mind the fact that RBI has shunned off forward guidance statement under the new regime. But worldwide if there is one thing which central bankers and c-bank watchers are increasingly talking, about it is forward guidance.  I mean just talk..how can something else be better?

PIMCO’s Richard Clarida and Saumil H. Parikh have this interesting article on FG statement. There are three types:

• Forward guidance is an explicit communication by a central bank that provides information today about the timing for specific policy tools in the future.
• There are at least three types of forward guidance: calendar-based, outcome-based and optimal control. Forward guidance of any type is most potent if it can credibly convey a commitment today to bind the choices of future policymakers.
• Since 2011 the Fed has deployed both calendar-based and outcome-based guidance. We expect the Yellen Fed to enhance the current outcome-based guidance to convey more information about the timing and pace of policy moves.

I guess some bit of forward guidance is fine but this increasingly scientific way of guiding one is never sure..