【IMIWorkingPaperNo.1905[EN]】China’sMonetaryPolicyCommunication:Frameworks,Impact,andRecommendations

【Abstract】
Financial markets are eager for any signal of monetary policy from the People’s Bank of China (PBC). The importance of effective monetary policy communication will only increase as China continues to liberalize its financial system and open its economy. This paper discusses the country’s unique instituitional setup and empirically analyzes the impact on financial markets of the PBC’s main communication channels, including a novel communication channel. The results suggest that there has been signifcant progress but that PBC communication is still evolving toward the level of other major economies. The paper recommends medium-term policy reforms and reforms that can be adopted quickly.
【Keywords】
Monetary Policy, People’s Bank of China, Communication, Central Bank, Financial Markets, Monetary Policy Transmission
【Authors】

Michael McMahon, Professor of Economics, Oxford University.

Alfred Schipke, Senior Resident Representative, IMF; Member of IMI International Committee.

Li Xiang, Economist, Peking University and IMF.