Post by account_disabled on Feb 27, 2024 16:02:45 GMT 10
Communication plays a vital role in the art of effective policy-making today, and this is especially true for central banks like the ECB. But several changes in the media landscape – from new technologies to the rising tide of fake news – have made it increasingly difficult for policymakers to “break through” to the general public. In other words, just as the need for effective communication has increased, so has the difficulty for policymakers in making their voices heard. This is a problem we cannot afford to ignore. As Ludwig Wittgenstein once observed, “the limits of my language mean the limits of my world . ” There is nothing wrong with central bankers citing smart people. But Wittgenstein? It was so opaque that Marie McGinn, emeritus professor of philosophy at the University of York, said we should not be surprised “if on a first reading [Wittgenstein's masterpiece Philosophical Investigations] we cannot see the point of [his] observations.” Here's a worthy-sounding opinion: Interacting with as broad a swath of the public as possible is a key part of any central banker's job.
Unelected bureaucrats should be held accountable for the important decisions they make, and the stories they tell (like Mario Draghi's “whatever it takes” speech in 2012) have the power to change the course of Jordan Mobile Number List economic history. And here's an alternative view: none of this is worth it. “Central banks will continue to try to communicate with the general public, as they should. But for the most part they will fail,” said Alan Blinder, former vice chairman of the Federal Reserve board of governors. Decades earlier, Montagu Norman, governor of the Bank of England from 1920 to 1944, summed up his approach to policy communication in four words: “never explain, never excuse.” Lagarde falls into the first camp, even as two interrelated factors – “increasing competition for attention” and “a general decline in trust” – conspire to make her job more complicated. You need not fear, because help is at hand: there is a beginner's guide to help you overcome these unique challenges of the 21st century.
Behold (from your former employer, no less): the IMF Monetary and Capital Markets Department's Central Bank Communications Technical Assistance Manual (updated January 2022). In 34 pages, the manual explains why communication must be clear and concise, aimed at different audiences, delivered regularly, equally accessible and use as little jargon as possible. Transparency is a quantifiably good thing, the pamphlet notes: Moving from a level of transparency equivalent to that of the Reserve Bank of India (which in 2010 (before the adoption of the inflation targeting framework) was near the bottom of the pack) to that of Sweden, at the top of the pack, reduces the variability of inflation at 3 pp and inflation at 11 pp, other things being equal. Once the basic concepts are clarified, the guide begins to delve into the nitty-gritty. “Conventional forward guidance,” she says, refers to the kind of projections for the future policy rate based on what is known at the time.