{
  "title": "Central Bank Communication and Monetary Policy Surprises in Chile",
  "publication": "IMF Working Papers, July 6, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/07/06/central-bank-communication-and-monetary-policy-surprises-in-chile-46000",
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  "summary": "This paper assesses the quality of the CBC’s communication policy by looking at the predictability and effectiveness of monetary policy communications by the Central Bank of Chile (CBC).",
  "sections": [
    {
      "heading": "Summary and Objective",
      "content": "- This paper assesses the quality of the CBC’s communication policy by looking at the predictability and effectiveness of monetary policy communications by the Central Bank of Chile (CBC).\n- To do so, the authors construct indeces of monetary policy surprises for the three major communication channels of the CBC: the release of policy meetings’ statements, minutes, and monetary policy reports (IPoM).\n- The assessment focuses on the size and time-evolution of monetary policy surprises associated with meeting statements and the impact of these communication channels on asset markets."
    },
    {
      "heading": "Methodology (communication channels and measurement)",
      "content": "- Monetary policy surprise indeces are constructed for:\n  - Policy meetings’ statements\n  - Minutes\n  - Monetary policy reports (IPoM)\n- Predictability and efficacy are evaluated by:\n  - The size and time-evolution of surprises associated with meeting statements\n  - The impact of communication channels on asset markets (equity prices and the exchange rate)\n  - A proxy VAR is used to estimate macroeconomic impacts of monetary policy shocks"
    },
    {
      "heading": "Key Findings",
      "content": "- General effectiveness\n  - The CBC has been effective in its forward guidance through its statements and IPoM.\n- Predictability\n  - Policy actions are quite predictable, especially post the global financia crisis.\n- Asset market responses\n  - The response of equity prices and the exchange rate to monetary policy surprises have the right sign but are not robust.\n  - There is an asymmetric response of equity prices to minutes, suggesting market participants extract information on the status of the economy especially when minutes have a loosening effect.\n- Macroeconomic impact (proxy VAR result)\n  - A 100 bps monetary policy tightening shock implies a decline in economic activity (IMACEC) of about 2 pp. after one year.\n  - The response of inflation is more muted."
    },
    {
      "heading": "Interpretation and Implications",
      "content": "- Forward guidance delivered via statements and IPoM appears to improve central bank predictability for markets.\n- Heterogeneous asset responses and limited robustness imply communication can be necessary but not always sufficient to move financial variables strongly.\n- Asymmetric market interpretation of minutes indicates markets pay attention not only to direction but to informational content about economic conditions, particularly when minutes indicate loosening.\n\nSource: Central Bank Communication and Monetary Policy Surprises in Chile, Andrea Pescatori, IMF Working Paper (2018/156).\n\n---\n\n Content in this bundle\n\n- Central Bank Communication and Monetary Policy Surprises in Chile, WP/18/156, July 2018\n  - Central Bank Communication and Monetary Policy Surprises in Chile, WP/18/156, July 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Central Bank Communication and Monetary Policy Surprises in Chile, WP/18/156, July 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/07/06/central-bank-communication-and-monetary-policy-surprises-in-chile-46000"
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    "Authors: Andrea Pescatori",
    "Published: July 6, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484363102.001",
    "This paper assesses the quality of the CBC’s communication policy by looking at the predictability and effectiveness of monetary policy communications by the Central Bank of Chile (CBC).",
    "To do so, the authors construct indeces of monetary policy surprises for the three major communication channels of the CBC: the release of policy meetings’ statements, minutes, and monetary policy reports (IPoM).",
    "The assessment focuses on the size and time-evolution of monetary policy surprises associated with meeting statements and the impact of these communication channels on asset markets.",
    "Monetary policy surprise indeces are constructed for:",
    "Predictability and efficacy are evaluated by:",
    "General effectiveness",
    "Predictability",
    "Asset market responses",
    "Macroeconomic impact (proxy VAR result)",
    "Forward guidance delivered via statements and IPoM appears to improve central bank predictability for markets.",
    "Heterogeneous asset responses and limited robustness imply communication can be necessary but not always sufficient to move financial variables strongly.",
    "Asymmetric market interpretation of minutes indicates markets pay attention not only to direction but to informational content about economic conditions, particularly when minutes indicate loosening.",
    "**Central Bank Communication and Monetary Policy Surprises in Chile, WP/18/156, July 2018**"
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      "title": "Central Bank Communication and Monetary Policy Surprises in Chile, WP/18/156, July 2018",
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