Central banks prefer to announce bad news gradually and not all at once

When we look at the dynamics of inflation in the United States, the euro zone and the United Kingdom, we see that bringing inflation back towards central banks’ inflation target will require much greater rate hikes than those announced by central banks today and which financial markets expect. Central banks probably know this, and they probably prefer to announce future rate hikes in stages and not all at once. A sudden announcement of a sharp future increase in key interest rates would cause financial markets to collapse, whereas a gradual announcement in several stages could have a less negative effect, as the markets "get used to bad news”. This explains central banks’ gradual approach, and the fact that financial market expectations do not yet reflect the reality of the future trend in interest rates. This “segmentation” of central bank announcements may prevent a market collapse, but it makes central bank behaviour opaque.