Clear Central Bank Communication Leads to Stable Inflation and Interest Rates.
Central banks can help stabilize inflation by communicating their economic assessments clearly. When central banks explain their policy decisions well, it helps people understand why they're doing what they're doing. This can lead to less unpredictable inflation and interest rates, giving central banks more room to adjust policies. Researchers used a simple model to show how this could work in Mexico, even when facing uncertain economic shocks.