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ECB's Draghi Says Forward Guidance A Success As "Full-fledged" Policy Tool

Forward guidance has evolved into a full-fledged monetary policy tool and has been successful, European Central Bank President Mario Draghi said Tuesday.

Speaking at the ECB's first conference on central bank communication in Frankfurt, Draghi said,"Forward guidance was initially protective and not proactive, and it worked."

He was part a four-member panel, which included US Fed Chair Janet Yellen, Bank of England Governor Mark Carney and Bank of Japan Chief Haruhiko Kuroda, discussing central bank communication.

"Forward guidance is especially important at the zero lower bound," Draghi said.

Yellen said all guidance should be related to the economic outlook. The broader public is interested in knowing what the bank is trying to achieve, she added.

Kuroda said communication is a matter of policy itself and central bankers must explain their policy in a straightforward manner to the public.

Carney said there was a need for a reasonable transition period post-Brexit. The event has created exceptional circumstances for the UK economy and is having an impact on incomes, he added.

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