Communication of Monetary Policy in Unconventional Times

Unusual times call for clear communication. Central bank forward guidance “on the future conduct of monetary policy” can work credibly to reduce economic uncertainty in concert with asset purchase programs. In less tumultuous economic times, central banks have been more sparse and opaque in their disclosures of policy measures and objectives. Since the global financial crisis, however, monetary officials have had to resort to less typical approaches that require more precise explanations. Central banks’ communications have in the main become more forward-looking. Indeed, communication itself has become a policy tool...