In the context of monetary policy, 'Forward Guidance' refers to:
A. Only reserve requirements
B. Communication by the central bank about the likely future path of policy rates
C. Only changes in the current policy rate
D. Only quantitative easing
Answer: Option B
Solution (By JKSSB Mock Tests)
Forward guidance is a policy tool in which the central bank communicates its intentions regarding the future path of the policy rate or other policy instruments in order to influence longer-term rates and expectations.
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