The International Monetary Fund (IMF) has suggested that central banks can enhance their chances of achieving a soft landing by improving their communication with the public. The IMF’s World Economic Outlook emphasized the importance of managing expectations about future inflation in combating high inflation. The report categorized two types of learners regarding central bank communication: backward-looking and forward-looking. It recommended that central banks improve their monetary policy frameworks and communication strategies to increase the share of forward-looking learners, ultimately improving the effectiveness of monetary policy decisions. The IMF also noted that communication is generally better in advanced economies than in emerging markets and developing countries. Some central banks, such as the Federal Reserve in the United States, have adopted more transparent communication strategies in recent years, including using social media platforms like Instagram. Improved communication can lead to a better understanding of how central bank decisions affect the public and financial markets, influencing spending decisions and economic outcomes.
IMF: Central Banks Can Improve Soft Landings with Better Communication
