the global crisis was a stark reminder that economic stability and financial stability are inextricably linked, and that pursuing the first without due regard for the second risks publishing the policy rate forecast path corresponding to the central bank ’ s forecasts of growth and inflation helps to communicate both the central bank ’ s prevailing views on the economy and its policy reaction function, which in turn should help policy expectations evolve efficiently as new information arrives. 11. see, for example, m. andersson and b. hofmann, “ gauging the effectiveness of quantitative forward guidance evidence from three inflation targeters, ” european central bank, working paper no. 1098, october 2009 ; c. e. walsh, “ optimal economic transparency, ” international journal of central banking 3 no. 1 ( march 2007 ) : 5 – 36 ; and g. - a. detmers and d. nautz, “ the information content of central bank interest rate projections : evidence from new zealand, ” reserve bank of new zealand discussion paper no. 2012 / 03. level of the neutral rate itself is, of course, subject to some debate. for example, see d. laidler, “ natural hazards : some pitfalls on the path to a neutral interest rate, ” backgrounder no. 140, c. d. howe institute, july 2011. bis central bankers ’ speeches achieving neither. while the primary tools to deal with financial stability are micro - and macroprudential regulation and supervision, it may be appropriate in some circumstances for monetary policy to contribute to financial stability directly by complementing macroprudential policy. 13 more specifically, because the consequences of financial excesses may be felt over a longer horizon than other economic disturbances, the potential may exist for tension between price and financial stability considerations over the typical monetary policy horizon. in current circumstances, the bank may want to set interest rates higher than would otherwise be warranted to bring inflation back to target within the typical six - to eight - quarter time frame. but that flexibility does not exist in a vacuum, and should never be used by stealth. the most recent financial system review elaborates on risks related to household imbalances in canada. their evolution may be a factor affecting the timing and degree of any withdrawal of monetary stimulus. if the bank were to lean against such imbalances, we would clearly say we are doing so, and indicate how much longer we expect it would take for inflation to return to the 2 per cent target. our current guidance is

of canada implements policy through changes in the target overnight interest rate, which has a limited direct impact on saving, investment and spending decisions. far more important is the impact the bank ’ s actions have on the broader spectrum of market interest rates, domestic asset prices and the exchange rate. what matters to these asset prices, however, is not so much the current setting of the policy interest rate but, rather, its expected path over time. thus monetary policy affects the regulation fair disclosure was adopted by the u. s. securities and exchange commission in 2000 to address the problem of selective disclosure of information by publicly traded companies and other issuers. regulation fd provides that when an issuer discloses material non - public information to certain individuals or entities, the issuer must make full public disclosure of that information. j. l. rogers, d. j. skinner and a. van buskirk, “ earnings guidance and market uncertainty, ” journal of accounting and economics 48, no. 1 ( 2009 ) : 90 – 109. p. hsieh, t. koller and s. r. rajan, “ the misguided practice of earnings guidance, ” perspectives on corporate finance and strategy, the mckinsey quarterly, no. 19 ( spring 2006 ). s. chen, d. matsumoto and s. rajgopal, “ is silence golden? an empirical analysis of firms that stop giving quarterly earnings guidance, ” journal of accounting and economics 51 ( 2011 ) : 134 – 50. bis central bankers ’ speeches economy primarily through policy - rate expectations. 5 the more those expectations are aligned with the policy path necessary to achieve the policy objective, the higher the probability the policy objective will be achieved. 6 the bank of canada has become significantly more transparent. we now explain our decisions eight times a year and provide rich supplemental detail in our quarterly monetary policy report. 7 these communications are designed both to report the bank ’ s views on the forces at work on the canadian economy and to help households, firms and financial market participants understand how the bank will respond to those forces over time. the goal here is, in effect, to allow markets and the public to “ think along with us, ” not only promoting the appropriate formation of policy expectations given current information, but also allowing those expectations to evolve efficiently as new information is received. we would have an easy time communicating our “ reaction function ” if we followed a simple mechanical rule. life would indeed be easier if we could be