Evolution in central bank communications vital: Janet
Ms Janet L Yellen, Vice Chair of the Board of Governors of the Federal Reserve System addressing the Haas School of Business, University of California, Berkeley, Berkeley said my subject is the recent revolution and continuing evolution in communication by central banks.
All of us, of course, live in an era of revolutionary advances in communication: If I succeed in saying anything interesting this afternoon, those words may be posted, tweeted, and blogged about even before I’ve left this podium. So, it might seem unsurprising that the
Federal Reserve, too, is bolstering its efforts at communication. But the revolution in central bank communication is not driven by technological advances. Rather, it is the product of advances in our understanding of how to make monetary policy most effective. A growing body of research and experience demonstrates that clear communication is itself a vital tool for increasing the efficacy and reliability of monetary policy.
In fact, the challenges facing our economy in the wake of the financial crisis have made clear communication more important than ever before. Today I’ll discuss the revolution in thinking about central bank transparency and how, pushed by the unique situation precipitated by the financial crisis, the Federal Reserve has responded with fundamental advances in communication. Indeed, I hope that one of the legacies of this difficult period is a permanent and substantial advance in Federal Reserve transparency, building on the policies I’ll talk about shortly.