Monetary policy communications

• September 28, 2018

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  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Credibility, Monetary policy communications, Recent economic and financial developments

• Monetary Policy Uncertainty: A Tale of Two Tails

  Staff Working Paper 2018-50 Tatjana Dahlhaus, Tatevik Sekhposyan

  We document a strong asymmetry in the evolution of federal funds rate expectations and map this observed asymmetry into measures of monetary policy uncertainty. We show that periods of monetary policy tightening and easing are distinctly related to downside (policy rate is higher than expected) and upside (policy rate is lower than expected) uncertainty.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Monetary policy and uncertainty, Monetary policy communications, Monetary policy transmission JEL Code(s): C, C1, C18, C3, C32, E, E0, E02, E4, E43, E5, E52

• Readability and the Bank of Canada

  Staff Analytical Note 2018-20 Alexandre Deslongchamps

  In this note, I assess the readability of Bank of Canada publications using a formula commonly used for this type of evaluation. I find that Bank publications are more difficult to read than the media articles and other content our target audiences likely consume. This suggests that more simple writing can help the Bank better meet its communication objectives.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credibility, Monetary policy communications JEL Code(s): D, D8, D83

• How Do Central Bank Projections and Forward Guidance Influence Private-Sector Forecasts?

  Staff Working Paper 2018-2 Monica Jain, Christopher S. Sutherland

  We construct a 23-country panel data set to consider the effect of central bank projections and forward guidance on private-sector forecast disagreement. We find that central bank projections and forward guidance matter mainly for private-sector forecast disagreement surrounding upcoming policy rate decisions and matter less for private-sector macroeconomic forecasts.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Inflation targets, Monetary policy, Monetary policy communications, Monetary policy transmission JEL Code(s): D, D8, D83, E, E3, E37, E5, E52, E58

• The Impacts of Monetary Policy Statements

  Staff Analytical Note 2017-22 Bruno Feunou, Corey Garriott, James Kyeong, Raisa Leiderman

  In this note, we find that market participants react to an unexpected change in the tone of Canadian monetary policy statements. When the market perceives that the Bank of Canada plans to tighten (or alternatively, loosen) the monetary policy earlier than previously expected, the Canadian dollar appreciates (or depreciates) and long-term Government of Canada bond yields increase (or decrease). The tone of a statement is particularly relevant to the market when the policy rate has been unchanged for some time.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Asset pricing, Exchange rates, Interest rates, Monetary policy communications, Monetary policy transmission JEL Code(s): E, E4, E43, E5, E52, F, F3, F31, G, G1, G12

• Communicating Uncertainty in Monetary Policy

  Staff Discussion Paper 2017-14 Sharon Kozicki, Jill Vardy

  While central banks cannot provide complete foresight with respect to their future policy actions, it is in the interests of both central banks and market participants that central banks be transparent about their reaction functions and how they may evolve in response to economic developments, shocks, and risks to their outlooks.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credibility, Monetary policy, Monetary policy and uncertainty, Monetary policy communications JEL Code(s): E, E5, E52, E58, E6, E61, E65

• Forward Guidance at the Effective Lower Bound: International Experience

  Staff Discussion Paper 2015-15 Karyne B. Charbonneau, Lori Rennison

  Forward guidance is one of the policy tools that a central bank can implement if it seeks to provide additional monetary stimulus when it is operating at the effective lower bound (ELB) on interest rates. It became more widely used during and after the global financial crisis.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Monetary policy transmission JEL Code(s): E, E4, E43, E5, E52, E58, E6

• Integrating Uncertainty and Monetary Policy-Making: A Practitioner’s Perspective

  Staff Discussion Paper 2014-6 Stephen S. Poloz

  This paper discusses how central banking is evolving in light of recent experience, with particular emphasis on the incorporation of uncertainty into policy decision-making.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Financial stability, Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework JEL Code(s): C, C5, C50, E, E3, E37, E5, E6, E61

• Has the Inclusion of Forward-Looking Statements in Monetary Policy Communications Made the Bank of Canada More Transparent?

  Staff Discussion Paper 2010-15 Christine Fay, Toni Gravelle

  To investigate the extent to which the transparency of the Bank of Canada's monetary policy has improved, the authors examine empirically – over the period 30 October 2000 to 31 May 2007 – the reaction of Canadian financial markets to official Bank communications, and in particular their reaction to the recent inclusion of forward-looking policy-rate guidance in these communications.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Interest rates, Monetary policy communications, Monetary policy transmission JEL Code(s): E, E5, E52, E58