How Central Banks Signal Policy Intent

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Oct 20, 2026 · 9m · transcript

Central banks don't just set interest rates; they manage market expectations through forward guidance and balance sheet signaling. In this episode, we examine how the Federal Reserve and European Central Bank use verbal commitments to steer long-term yields without moving short-term policy rates. We look at the mechanics of yield curve control, the psychological weight of central bank language, and why markets often react more to what a central banker says than what they do. Lucas and Luna break down the difference between open and closed-ended guidance, using historical examples from…