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Experience with Canada’s no-guidance approach highlights volatility risks

The post-2008 Canadian experience is being used to illustrate how removing forward guidance could increase market volatility.

Reported · Written up by our desk · Central Banks

MarketWatch discusses how changes to forward guidance, including a more no-guidance approach, were tested by Canada after the 2008 period.

The outlet frames the episode as a case study for the potential volatility risks of a similarly structured, less guided communication strategy in the context of Fed policy.

The article links the Canada example to concerns that forward guidance can affect how markets react, particularly when guidance is reduced.

MarketWatch characterizes the lesson as cautionary for policymakers considering a shift away from guidance-based messaging.

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