Therefore, starting from the late 1990s – so well before the dramatic changes produced by the global nancial crisis – a substantial evolution in thinking about central bank communication began. In 1996, Alan Blinder argued that effective communication is instrumental to enhance the ef cacy of monetary policy. Providing markets with more information helps expectation formation and creates a virtuous circle.
In Blinder’s words, “by making itself more predictable to the markets, the central bank makes market reactions to monetary policy more predictable to itself.