Today, I would like to talk about communication on monetary policy – a topic of growing interest among central banks – in the context of the Bank of Japan. To begin with, let me pose a question: why do central banks pay special attention to their communications on monetary policy with the public (meaning market participants and the general public)?
I think there are at least three reasons: (1) to ensure central bank accountability; (2) to enhance the effectiveness of monetary policy; and (3) (in a narrower sense) to make active use of communication as a nontraditional monetary easing measure among central banks in the face of the zero lower bound on short-term interest rates.