Discussion Paper Details

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Title: Improving U.S. Monetary Policy Communications

Author(s): Stephen G Cecchetti and Kermit Schoenholtz

Publication Date: August 2019

Keyword(s): central bank accountability, central bank communication, Federal Reserve, forward guidance, monetary policy, Monetary policy credibility, Policy Transparency and Reaction functions

Programme Area(s): International Macroeconomics and Finance and Monetary Economics and Fluctuations

Abstract: The Federal Open Market Committee (FOMC) publishes vast amounts of information regarding monetary policy, including its goals, strategy and outlook. By reinforcing the commitment to price stability and maximum sustainable employment, this transparency has helped improve U.S. economic performance in recent decades. Based on two dozen interviews with policy experts, we identify three objectives that guide our search for further improvements in communications practices: simplifying public statements, clarifying how policy will react to changing conditions, and highlighting uncertainty and risks. As examples, we propose a simpler post-meeting policy statement and the introduction of a concise Report on Economic Projections, the elements of which are mostly available in existing publications. A broader, systematic application of these objectives could also help the FOMC streamline other aspects of its communications framework.

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Bibliographic Reference

Cecchetti, S and Schoenholtz, K. 2019. ' Improving U.S. Monetary Policy Communications'. London, Centre for Economic Policy Research.