The new policy will "slowly, step by step, enhance the ability of the central bank to guide interest rates in the market," the central bank, known as the People's Bank of China, said in a statement.
Some members of the Fed's policy-setting committee want it to publish additional economic targets, such as an unemployment rate, which would guide interest rates.
It also explains why the central bank's president, Jean-Claude Trichet, places an emphasis on the "consensus" guiding interest rates every month.
Indeed, if Mexico, the only other big Latin American economy with a floating currency, is any guide, interest rates may well stay high.
By restricting its liquidity support, the ECB will be able to guide overnight interest rates towards 1% without having to alter its policy rate.Because the ECB has had one eye on the exit since the start of the crisis it has earned plaudits from those who think the Federal Reserve has been incautious.
It also provides a guide to interest rates, since banks set loan rates above the discount rate.
Company failures could grow even faster, especially in light of the decision by the Bank of Japan last week to guide short-term interest rates higher for the first time in a decade.
Earlier this year, the Fed abandoned its 6.5% unemployment target as a guide for raising interest rates.
But with the good job figures, the markets have now shortened the odds of a interest-rate cut in May to just 50%.All eyes will now turn to the next inflation numbers, due to be released on April 22nd, which will provide a clearer guide for where interest rates will go next.
The rule is a guide to what interest rates should be, depending on the amount of slack in the economy and the inflation rate.It says that if there is no output gap (ie, if GDP is in line with the economy's capacity) and inflation is equal to the central bank's target, then interest rates should be at a neutral level, causing the economy neither to accelerate nor to slow down.
