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Evolving approaches to monetary policy communication in the face of uncertainty: fan charts, scenarios and guidance

Author

Listed:
  • Sarah Bell
  • Matthieu Chavaz
  • Boris Hofmann
  • Daniel Rees
  • Matthias Rottner

Abstract

The elevated and rapidly shifting nature of uncertainty in recent years has posed challenges for central bank communication. In particular, central banks have had to reconsider how to communicate the economic outlook and the monetary policy response. They have expanded their communications toolkit to explain uncertainty about the outlook and are increasingly using scenario analysis to complement traditional tools like fan charts and qualitative risk discussions. Fewer central banks are providing descriptive policy guidance; instead more are publishing their own policy rate projections, often in the context of alternative scenarios.

Suggested Citation

  • Sarah Bell & Matthieu Chavaz & Boris Hofmann & Daniel Rees & Matthias Rottner, 2026. "Evolving approaches to monetary policy communication in the face of uncertainty: fan charts, scenarios and guidance," BIS Quarterly Review, Bank for International Settlements, March.
    • Handle: RePEc:bis:bisqtr:2603b
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    References listed on IDEAS

    as
    1. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
    2. Boris Hofmann & Dora Xia, 2022. "Quantitative forward guidance through interest rate projections," BIS Working Papers 1009, Bank for International Settlements.
    3. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
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    5. Taejin Park & Fernando Perez-Cruz & Hyun Song Shin, 2025. "Mapping the space of central bankers' ideas," BIS Working Papers 1299, Bank for International Settlements.
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    7. Sharon Kozicki & Jill Vardy, 2017. "Communicating Uncertainty in Monetary Policy," Discussion Papers 17-14, Bank of Canada.
    8. Andrew Filardo & Boris Hofmann, 2014. "Forward guidance at the zero lower bound," BIS Quarterly Review, Bank for International Settlements, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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