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CENTRAL BANK COMMUNICATION IN THE XXI CENTURY: A SURVEY OF THEORY AND EVIDENCE

Hanna Sakhno ()
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Hanna Sakhno: National Research University Higher School of Economics

No WP BRP 16/PSP/2018, HSE Working papers from National Research University Higher School of Economics

Abstract: After the recent global financial crisis, central banks in advanced and developing economies found themselves unable to stick to their mandate goal of price stability by resorting to traditional instruments of monetary policy. When key interest rates approached the zero bound, the need to develop a new toolkit of liquidity provision arose. Central banks embarked on numerous non-standard monetary policy measures aimed at ensuring financial stability and restoring economic growth. Communication has become an effective auxiliary instrument of economic policy, and markets started paying precise attention to the way central bankers report information regarding the future path of monetary policy. The purpose of this paper is to provide an overview of recent trends and developments in central bank communication strategies. By resorting to the existing literature, we analyze the origins of central bank communication and the evolution of its role in time. We also study the main instruments of communication strategies of large central banks. In the final part of the study, we investigate the communication strategy of the US Federal Reserve and the way it may cause spillovers to fragile markets abroad. We outline at least three major channels of international policy transmission: through stocks, bonds and exchange rates fluctuations

Keywords: central bank communication; unconventional monetary policy; international spillovers; the Federal Reserve. (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2018
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Published in WP BRP Series: Public and Social Policy / PSP, March 2018, pages 1-15

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