Monetary policy communication and uncertainty

Release date
Vol. 66. No. 2. June 2003
Tim Hampton; Renee Philip; Dominick Stephens
Central banks have become progressively more transparent in explaining to the public the rationale for a given monetary policy decision, often using economic projections as a vehicle for explaining policy issues. Nevertheless, increased transparency poses potential risks, particularly if the uncertainty around projected outcomes is not communicated in a way that avoids misleading readers. This article describes a number of the options available to central banks for communicating uncertainty.