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But maybe we are all searching for something that does not exist. The Federal Reserve Bank of St. Louis released a report last year on the effectiveness of central bank forward guidance.  It looked at early adopters of forward guidance including the Reserve Bank of New Zealand, central banks in Norway and Sweden and it also included the US Federal Reserve. Interestingly, this report found that forward guidance was only statistically significant at predicting where interest rates would be three quarters in advance for Norway and Sweden. In the US and New Zealand the report found there was no statistical link. The overall findings of the report found weak evidence that forward guidance increased the ability of market participants to forecast future short term yields, and no evidence of increased predictability of long-term yields. Thus, one the Federal Reserve’s own banks have reported that it is “difficult to see how forward guidance could significantly increase these central banks’ ability to control long-term yields”.
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