Concept guide · Monetary Policy
Major Central Banks & Forward Guidance
How mandates, interest rates, balance sheets and communication influence expectations.
What central banks do
Central banks set or influence short-term monetary conditions and pursue statutory mandates such as price stability. Some also operate balance-sheet programmes, conduct liquidity operations and communicate future policy considerations.
How to read a decision
Separate the current policy decision, its justification, new forecasts, vote details and the possible future reaction function. An unchanged policy rate does not mean a central bank changed nothing.
Why markets care
Expected short rates, bond yields, credit spreads and exchange rates respond to changing perceptions of policy and risk. This response is conditional rather than automatic.