The largest effects on policy expectations and yields were observed following FOMC statements that directly addressed the likely future evolution of policy, such as the August 2003 statement that invoked the “considerable period” and the January 2004 statement that introduced the phraseology that the Committee “can be patient.” There seems to be little doubt that FOMC statements can have a substantial influence on year-ahead policy expectations.
Over the longer term, stable capital inflows into emerging-market countries can only be secured by pursuing sustainable policies. But that is not quite enough. Transparency counts. Financial market players want to base their decision-making on hard facts. Countries seeking access to financial markets must provide reliable economic and financial data on a timely basis – just like companies do.