HowdoCentralBanksWriteAnevaluationofInflationReportsby.ppt

How do Central Banks Write?An evaluation of Inflation Reports by Inflation-Targeting Central Banks Andrea Fracasso Hans Genberg Charles Wyplosz Our brief What constitutes international ‘best practice’ in Inflation Report Not a study of inflation targeting as such Sponsored by the Bank of Norway but not a specific study of its Inflation Report Our conclusions Central bank communication is particularly important in an IT framework Inflation reports are efficient ways to convey the essence of IT strategies It is possible to identify a set of core themes that must be treated for an IR to be in the ‘best practice’ league High-quality IRs and predictability of monetary policy appear to be related Why do IT countries publish Inflation Reports? The nature of inflation targeting IT is a precise mandate which must be delegated to an independent central bank For delegation do be acceptable it must be viewed as legitimate and this requires accountability Why do IT countries publish Inflation Reports? IT requires good communication Explain and justify mission Explain and justify strategy Inflation forecast becomes crucial Whose is it? How is it prepared? How uncertain is it? All very complicated: Inflation Report Why do IT countries publish Inflation Reports? Anyway efficient policy calls for maximum transparency, IT or not Central bank controls short term interest rate Policy works through: Long-term interest rates Exchange rate Asset prices All are set by markets and their expectations Shaping market expectations is important There are many ways to communicate Speeches, press releases, general pamphlets, Inflation reports/Quarterly Bulletins, Annual Reports, Research Papers Many are intended for one particular audience or to serve one particular function All are necessary, however… The special role of the Inflation Report Collects all relevant information about the monetary policy strategy in one document Linked to monetary policy decisions Continuity Not to be overlo