Central banks all over the world try to change the short term interest rates on the assumption that it will influence the medium and long term interest rates - after all it is the medium and long term rates that affect expectations and asset prices (Blinder, 1998). To a large extent, this happens through explanations or forecasts.
The effectiveness of these will crucially depend on the degree of sophistication of the financial market participants and the interlocutors. The extent of transparency in central bank communication has been dictated by the norms of openness in the body-politic as well. Illustratively, Bank of England (BoE)’s information dissemination is governed by the Freedom of Information Act 2000 of the U.K.