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

Publication Date:

March 1, 1997

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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


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.


Working Paper No. 1997/028



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


Publication Date:

March 1, 1997



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