More open public disclosure of central bank policies may enhance the efficiency of markets, through the following two channels: •  First, greater information about how a central bank makes policy decisions helps to reduce financial speculation. •  Second, clearer decision rules help to reduce the volatility of markets, and, thus, enhance the predictability of future movements of financial assets.
Furthermore, as the rational expectations literature has taught us that the effects of a given policy action have to be defined within a treatment of policy expectations. It is argued that an assumption about public understanding of the future course of policy is a precondition for any coherent analysis of current policy. Monetary policy is no exception to this general rule.