Monetary policy frameworks and communication (2019-2022)

Monetary policy frameworks and communication are continuously being refined and improved as central banks learn from previous experiences. Since the Great Financial Crisis (GFC) of 2007-09, in particular, financial stability considerations and the use of multiple instruments have gained greater importance. As a result, communication has also become more complex. Most of the economies in the region were not severely affected by the GFC, since they had implemented solid macroeconomic adjustments in the years preceding the crisis. However, emerging market economies in general have had to deal with the large swings in capital flows since then, due to abundant liquidity and a global search for yield.

The research conducted within this network investigates how monetary policy communication affects financial markets, including expectations of future inflation and interest rates. It also reassesses the importance of the monetary policy transmission mechanism.

The network is part of a wider effort by the BIS to boost research on monetary policy frameworks, one of the research priorities of the BIS under the Innovation BIS 2025 strategy. Other initiatives include one comprising a small number of advanced economy central banks and another involving the Office for Asia and the Pacific.

Michael McMahon (University of Oxford) and José De Gregorio (Universidad de Chile and former Governor of the Central Bank of Chile) are the academic advisers for this network.