 Do monetary policy transparency and central bank communication reduce interest rate disagreement?Ruttachai Seelajaroen, Pornanong Budsaratragoon and Boonlert Jitmaneeroj Journal of Forecasting, 2020, vol. 39, issue 3, 368-393 Abstract: Yes. This study produces evidence that monetary policy transparency and communication policy of the Bank of England have information content in reducing disagreement about interest rate forecasts. Different from most extant studies employing the transparency index derived from official documents of the central banks, this study extends the literature by using a recently developed market‐based monetary transparency index. Moreover, this study analyzes forecast disagreement in a multivariate perspective based on survey data of short‐ and long‐term rates over short and long horizons. This study characterizes several patterns on forecast disagreement related to maturities of interest rates, forecast horizons, recessions, forward guidance, credibility, transparency, and communication policy. Interestingly, disagreement among the Monetary Policy Committee in policy rate decisions is associated with lower disagreement among professional forecasters on interest rate outlook, whereas neither announcement of changes in policy rates nor publication of inflation reports affects forecast disagreement. These results have important implications for monetary policymakers in managing market expectations of interest rates. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wly:jforec:v:39:y:2020:i:3:p:368-393 Access Statistics for this article Journal of Forecasting is currently edited by Derek W. Bunn More articles in Journal of Forecasting from John Wiley & Sons, Ltd. |
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