Market Information and Signaling in Central Bank Operations, or, How Often Should a Central Bank Intervene?

Publication Date:

March 1, 1997

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A central bank must decide on the frequency with which it will conduct open market operations and the variability in short-term money market that it will allow. It is shown how the optimal operating procedure balances the value of attaining an immediate target and broadcasting the central bank’s intentions against the informational advantages to the central bank of allowing the free play of market forces to reveal more of the information available to market participants.

Series:

Working Paper No. 1997/028

Subject:

Banking Central bank operations Central banks Financial markets Financial services Market interest rates Money markets Open market operations Short term interest rates

Notes:

Also published in Staff Papers, Vol. 44, No. 4, December 1997.

English

Publication Date:

March 1, 1997

ISBN/ISSN:

9781451844627/1018-5941

Stock No:

WPIEA0281997

Pages:

28

Please address any questions about this title to publications@imf.org