Barclays Capital Research 

How should central banks communicate?
Julian Callow, Simon Hayes, Dean Maki, Lauren Ungerleider
During the past decade, central banks have spent considerable effort seeking to have clear communication with financial markets in order to improve the effectiveness of their monetary policy operations. In our view, central banks have in general achieved a good level of understanding in this respect. In this note, we support this by reference to surveys of our counterparts which we conducted in August 2007 and August 2008, each time involving over 1000 participants from the financial markets. Our surveys found that investors rated the Federal Reserve System (Fed) as having the best communication abilities, with an average score of 7.4 in both surveys (on a scale of 1~10). Ratings for the European Central Bank (ECB) and Bank of England (BoE) were just slightly lower in the 2008 survey: the ECB rating slipped slightly from 7.2 in 2007 to 7.0 in 2008, while the BoE rating also slipped marginally, from 6.9 in 2007 to 6.8 in 2008, though such shifts could reflect some shifts in the composition of responses. Meanwhile, the Bank of Japan (BoJ) rating for communication improved significantly in our 2008 survey to 5.9, up from 5.1 in the August 2007 survey.