Communication plays a crucial role in successful conduct of monetary policy by the Bank. I would like to highlight three reasons why this is so. First, the Bank adopted its 2 percent price stability target in terms of the year-on-year rate of change in the consumer price index (CPI) in January 2013.
There is an inherent challenge in convincing households of the benefits of this target, since they tend to see a rise in inflation as unfavorable. This is especially true when a rise in wages does not take place immediately, or expectations of future wage growth are not fulfilled. Thus, communication is important in this regard.