20 Years of Central Bank Communications, and Lessons for the Future

Central bank communications have undergone profound changes over the past two decades as central banks greatly enhanced their transparency and openness in order to support their monetary policy objectives. It has become widely accepted that clear communication by central banks is important in order to enhance credibility, improve monetary policy effectiveness and reinforce accountability. Some key lessons have emerged, notably the following seven: (i) public support of inflation targeting objectives and means is essential; (ii) central bank mandates must be focused and achievable; (iii) credibility is enhanced when central banks acknowledge uncertainty; (iv) crises require a different style of communicating; (v) public demand for information has increased; (vi) central banks must deploy new ways of reaching audiences; and (vii) central banks need to listen to a wide range of stakeholders. Central bank performance is judged by results and economic outcomes, but success is more likely if central banks clearly communicate to help citizens navigate the broader economic forces at work and understand how policies affect them. These efforts improve policy decisions, reinforce legitimacy and cement public trust.