When a central bank changes its short-term interest rate, interest rates at intermediate to medium-term maturities tend to shift in the same direction, if there is a signal that the new level of the short-term interest rate is likely to persist1. In general, this puts a premium on the way central banks communicate about, or at least are perceived to reveal their policy orientation.
Is there evidence supporting the contention that central banks’ perceived orientation is as important as their actions? Answering this question is difficult.