Title Central Bank Communication and Monetary Policy Surprises in Chile

Published Washington, D.C. : International Monetary Fund, 2018

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Description 1 online resource (34 pages) Series IMF Working Papers IMF Working Papers; Working Paper ; no. 18/156 Contents Cover; Central Bank Communication and Monetary Policy Surprises in Chile; I. INTRODUCTION; II. THE CENTRAL BANK OF CHILE INFLATION-TARGETING FRAMEWORK; III. DATA AND METHODOLOGY; IV. PREDICTABILITY; V. EFFICACY: FIXED-INCOME MARKETS; VI. EFFICACY: EXCHANGE RATE AND STOCK MARKET IMPACT; VII. MONETARY POLICY COMMUNICATION AND INFLATION DISPERSION; VIII. THE MACROECONOMIC IMPACT; IX. CONCLUSION; X. REFERENCES; XI. FIGURES; XII. TABLES 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). To do so, we 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). We assess monetary policy predictability and efficacy by looking at the size and time-evolution of monetary policy surprises associated with meeting statements and the impact of the above communication channels on asset markets. We find that, in general, the CBC's has been effective in its forward guidance through its statements and IPoM. Policy actions are quite predictable, especially post the global financia crisis. The response of equity prices and the exchange rate to monetary policy surprises have the right sign but are not robust. We also find an asymmetric response of equity prices to minutes suggesting that market participants extract information on the status of the economy especially when minutes have a loosening effect. Finally, to look at the macroeconomic impact we find that a 100 bps monetary policy tightening shock implies a decline in economic activity (IMACEC) of about 2 pp. after one year, while the response of inflation is more muted Notes Print version record Subject Banks and banking, Central -- Chile Monetary policy -- Chile Monetary policy Economic history Banks and banking, Central Central Banks And Their Policies. Financial Markets And The Macroeconomy. General. Monetary Policy (Targets, Instruments, And Effects) SUBJECT Chile -- Economic conditions. http://id.loc.gov/authorities/subjects/sh85023872 Subject Chile Form Electronic book ISBN 1484368010 1484363108 9781484363102 9781484368015

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