Monetary Transmission in India: Why is it important and why hasn’t it worked well? -  Dr.
1 Why should central banks avoid surprising financial markets? In recent decades, it has been increasingly acknowledged that monetary policy implementation relies importantly on the management of market expectations. 2 In theory, clarity about the central bank’s reaction function--that is, how the central bank adjusts the stance of monetary policy in response to changing economic conditions--allows the market to alter financial conditions smoothly.