The third challenge is for the communication framework to provide clarity on the use of specific tools in a multi-instrument context, when the central bank reaction function acquires an additional dimension. In normal times, the central bank reaction function mainly specifies the contingencies for loosening, tightening or maintaining a given policy stance.
In unconventional times, it also needs to spell out which tool would provide the first margin of adjustment if a change in policy stance were to appear warranted, and how the adjustment in one policy instrument would interact with the others.