Nick Timiraos, the "Federal Reserve mouthpiece": Forward guidance is a statement made by the central bank about planned future actions, or under what circumstances it will take a certain action. This is very different from a reaction function. A reaction function is a mapping relationship, such as that represented by the Taylor rule. It does not require any prediction. A reaction function does not say where the economy or policy will go in the future; instead, it answers how policy should respond to specific economic conditions, policy trade-offs, or other factors.
