Caruana calls on central banks to explain reaction functions

Adds they should have a ‘good understanding’ of policy spillovers

caruana

It is "crucial" that central banks "do everything they can" to manage expectations about their plans and the uncertainties surrounding their plans as they normalise monetary policy, according to Jaime Caruana, general manager of the Bank for International Settlements (BIS).

Caruana told at an audience at Goethe University, in Frankfurt, that central banks should explain the thinking behind their actions "as well as how their policies might change as conditions evolve". This means ensuring that

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