4 Absent such communication, inefficient divergences between public expectations and central bank intentions for the policy rate path can emerge and persist in ways that are costly to the economy when reversed. Within this general framework, let me now consider two distinct ways in which I think that the path for the federal funds rate should be data dependent.
On many occasions, Duisenberg explained that free capital flows were in the interest of The Netherlands. As a small, open economy, the Netherlands could only benefit from international cooperation, free trade and free capital markets. Duisenberg advocated the opinion that integration of monetary policy was the inevitable reply to this liberalization of European money and capital markets.