SHORT ANSWER
The core idea
Forward guidance changes the expected future path of policy rates and therefore the discount rates embedded across the yield curve.
THE MECHANISM
What is happening underneath
A central bank can move multi-year bond yields without changing today's policy rate if its communication changes expectations materially.
MARKET INTERPRETATION
How investors should read it
The effect depends on credibility and how surprising the guidance is.
BONDSTATS TAKEAWAY
The same market move can carry different information depending on which maturity, issuer and risk premium is changing. Read the question together with the underlying concepts rather than treating one price move as a universal signal.
RELATED CONCEPTS
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