My old friend, [former] Governor [Duvvuri] Subbarao; SEACEN Center Executive Director, Cyn-Young [Park]; fellow central bankers; distinguished speakers and participants; colleagues, good morning.
Welcome to the SEACEN Masterclass on Central Bank Communication, and welcome to Manila.
Congratulations, Cyn-Young, for organizing a Masterclass around a topic that rarely gets its own stage.
We talk all the time, but we rarely talk about how we talk.
Let me start with a confession. We, central bankers, like to think that our most powerful tool is the policy rate.
I believe explaining our decisions can be equally powerful. The policy rate, of course, moves money. The narrative behind it and where it might go also shapes behavior, and that behavior is often what we are after.
Central banks, of course, have different approaches to communication. Many of us had taken cues from the U.S. Fed [United States Federal Reserve], which had become increasingly transparent over the years. We release a statement about our policy decisions, and then we hold press briefings to explain them.
Central bank communication was not always so transparent. If I may repeat what Cyn-Young has said, in 1987, U.S. Fed Chairman Alan Greenspan famously said, “Since I've become a central banker, I've learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.”
Those were different times. Ambiguity was almost an art form for central bankers. Today, central bankers are expected not only to make decisions, but also to explain them.
The European Central Bank faces a different challenge. It publishes its key decisions in the 24 official languages of the European Union. Nonetheless, it uses English as its main working language.
Even central bankers need a common language. Communicating monetary policy matters, especially today when uncertainty is so high. With global supply shocks, fragmentation, and other noises, people look to central banks for guidance.
What we say can be just as important as what we do. After all, monetary policy works best when our message is not just heard but understood.
Welcome again, and I wish everyone a productive Masterclass.
Thank you.