In the remainder of my presentation, I will focus on four issues: •  first, I will review the role of central bank communication in the conduct of monetary policy and assess both its benefits and limitations;  •  second, I will discuss the appropriate content and means of monetary policy communication, with reference to the practice and experience of the European Central Bank;  •  third, I will address an issue which has received much attention recently, but which continues to be controversial, namely the potential usefulness of announcing the likely future path of future policy interest rates; and  •  fourth, I will assess the available empirical evidence about the effectiveness of the ECB’s communication policy and conclude by highlighting two issues concerning central bank communication and policy effectiveness.
BIS Review 5/2008  1  II. Role and importance of monetary policy transparency and communication  It is generally agreed that a high degree of transparency and an effective communication of policy are necessary for the successful performance of central bank tasks. Several arguments and a wealth of empirical evidence support this proposition.