Under a conventional policy rule, a central bank adjusts its policy rate linearly according to the gap between … central bank controls inflation aggressively when inflation is far from its target, but concentrates more on output …

Despite substantial differences in monetary policy and communication strategies, many central banks share the practice …. This practice is remarkable, as it seems to contradict the virtue of transparency by requiring central banks to withhold … substantially more sensitive to central bank communication around policy meetings. Short-term interest rates react three to four …

We study credible information transmission by a benevolent Central Bank. We consider two possibilities: direct … transmitting information have very different consequences. Since the objectives of the Central Bank and those of individual … investors are not always aligned, private investors might rationally ignore announcements by the Central Bank. In contrast …