Anna Breman: Daring to think differently – on the Riksbank’s monetary policy communication

The Riksbank often ranks highly in surveys of central bank transparency. In particular,  there are three main elements of the Riksbank's monetary policy communication that distinguish the Riksbank from many other central banks, where we have dared to think differently and pushed transparency a little further. The Riksbank publishes a forecast for the policy rate, alternative scenarios  and we have attributed minutes where one can see how the various Executive Board members justify their decisions. There are both pros and cons with this high level of transparency, but the overall picture is that the experience has been favourable,” said Ms Breman.  

“In my experience, transparency builds trust. Openness about the basis for decisions creates an understanding of monetary policy, and of the often difficult trade-offs it faces. Such an understanding increases confidence in monetary policy, rather than reducing it, which in turn makes the policy easier to conduct.”

At the same time, she emphasised that different central banks have different capacities to communicate in an open and transparent way.

“Central banks differ. These differences may have historical, political or cultural reasons. How transparent a central bank is, and can be, is not just a matter of its own ambitions or those of its principals. It also involves factors such as the design of the monetary policy framework and the composition of its Monetary Policy Committee.”

Ms Breman believes that publishing alternative scenarios will be relevant for more central banks in the future, especially if the economic policy uncertainty we are experiencing today continues. Although it is not possible to predict the unpredictable, one can nevertheless prepare households, firms and market participants for the fact that developments may be significantly different from the main scenario of the forecast.