China's Monetary Policy Communication: Frameworks, Impact, and Recommendations
33 Pages Posted: 13 Feb 2019
Date Written: November 2018
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 institutional 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 significant 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, Financial markets, Monetary transmission mechanism, Central banks and their policies, People’;s Bank of China, Communication, Central Bank, Monetary Policy Transmission, People;’s Bank of China, Monetary Policy (Targets, Instruments, and Effects), General
JEL Classification: E58, E52, E40
Suggested Citation: Suggested Citation