Welcome to the Financial Times Lexicon

Browse thousands of words and phrases selected by Financial Times editors and suggest new terms for the glossary.

 

Term of the day

forward guidance

Forward guidance is the term used by central banks to communicate what their future monetary policy will be. By using forward guidance, banks aim to calm uncertainty in markets and corporations. For example, if markets or company owners fear that low interest rates will move higher, interest rates on bonds and other credit instruments and agreements will rise and begin to discourage people and companies from taking out loans or spending money. If a central bank is able to transparently signal...