China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations

Michael McMahon, Alfred Schipke and Xiang Li

No 2018/244, IMF Working Papers from International Monetary Fund

Abstract: Financial markets are eager for any signal of monetary policy from the People’s Bank of China (PBC). The importance of effective monetary policy communication will only increase as China continues to liberalize its financial system and open its economy. This paper discusses the country’s unique institutional setup and empirically analyzes the impact on financial markets of the PBC’s main communication channels, including a novel communication channel. The results suggest that there has been significant progress but that PBC communication is still evolving toward the level of other major economies. The paper recommends medium-term policy reforms and reforms that can be adopted quickly.

Keywords: WP; PBC communication; PBC interest rate change; PBC budget; PBC forecasting resource; PBC governor; reverse repo; Monetary Policy; People’s Bank of China; Communication; Central Bank; Financial Markets; Monetary Policy Transmission; PBC official; PBC communications; OMO rate; Communications in revenue administration; Open market operations; Market interest rates; Monetary policy frameworks; Central bank policy rate; Global; China's monetary policy communication; china's monetary policy communication; Monetary policy communication (search for similar items in EconPapers)
Pages: 32
Date: 2018-11-16
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Citations: View citations in EconPapers (15)

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