challenges monetary policy_communication
TRANSCRIPT
Challenges of Monetary Policy Communication:
Bank of Uganda Experience
October 2012
A Presentation made at the Bundesbank Public Relations Seminar
By Kelvin Kizito Kiyingi
Introduction
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Who is Kelvin Kizito Kiyingi?
MABJ, Reuters Fellow City University of New York Post Bank, Communication
Manager U.S. Embassy Kampala,
Information Assistant
Bank of Uganda, Assistant Director, Communications Department
Outline1. Background: New Monetary Policy
Framework2. Monetary Policy Decision Making at Bank of
Uganda (BoU)3. Content and Structure of BoU’s Monetary
Policy Communication4. Challenges5. Conclusion
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New Monetary Policy Framework
In July 2011, BoU introduced Inflation Targeting lite (ITL) monetary policy framework,
replacing monetary aggregate targeting
ITL requires more discretion on the part of policy makers
than monetary aggregate targeting
Therefore, credibility and transparency play important
roles
Sensitization workshops/seminars for key
stakeholders
Use of the policy rate, the Central Bank Rate (CBR)
Focus on high inflation and depreciating exchange rate
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Monetary Policy Decision Making
Daily Financial Markets Operations Sub-Committee Meeting Chaired by Deputy Governor (does not make monetary policy decisions, it only implements)
Weekly Monetary Policy Committee (MPC) Meeting Chaired by Governor
Monthly MPC which sets CBR key meeting for taking decisions
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Monetary Policy Communication Functions
Enhance effectiveness of Monetary Policy decisionsContribute to the credibility of Central Bank
Build better understanding amongst Central Bank staff, management and board
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External Communications
Internal Communications
Content & Structure
Monthly Monetary Policy Statement
• One hour after MPC• In-depth explanation• Forecast of inflation• Media engagement
• Media with EDR
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Content & StructurePublish Monetary Policy Statement verbatim in key
newspapers
Place articles in the press
Talk shows both on Radio & Television
Press interviews
With ITL, media devotees pay
more attention to monetary policy
CBR “visible” in a way monetary
aggregates are not
Audiences familiar with interest rates
so CBR attracts more attention
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The Media
Content & Structure
The Website • Social Media• Statements• Policy Reports• Exchange Rates
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External Tools
Monetary Policy
Website
Media Training
Money Museum
Outreach Programmes
Monetary Policy
Reports
Placements
Monetary Policy
Statements
Radio/TV Talk Shows
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Internal Tools
Intranet• Statements• Rates
E-mails• Interpretations• Information
Exchanges
• Knowledge Sharing
• Internal Forums
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Challenges
Language
Official/business language is
English
Functional literacy in
English is limited
Over 40 languages in
Uganda
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ChallengesLack
• Low financial literacy levels• Little understanding of the demand management concept; Private Investments;
Gov’t Spending; Exports
of
• Lack of understanding of BoU’s role amidst a liberalised environment• Differentiating between monetary and fiscal policy
Informed
• Relationship between interest rates, exchange rate and inflation• Limited knowledge of what macroeconomic policy can and cannot do
Debate
• Paucity of independent institutions which can contribute to informed analysis, forecast, etc.
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ChallengesO
ption
al
Play video from BoU site; http://www.youtube.com/ watch? v= JqmyKA8sf0I & feature=player embedded#t=20s
Vide
o Cl
ip
Governor Bank of Uganda, Professor Emmanuel Tumusiime Mutebile, addresses press conference at which Monetary Policy Statement for September 2012 was issued
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Challenges
The Media
Lack of qualified business
journalists
Limited interpretative
reporting
Business sections heavily influenced
by advertisers
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Challenges
Dual RoleInforming and
educating concurrently
Lack of monetary policy
communication capacity
ITL Framework
Convincing public of most likely outcome over
next few months
Convincing public the interest
decision is the best one
Tough Times
Some want low interest rates & inflation as well as strong shilling
Dep. Gov wrote an article
addressing this in a national daily
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Proposed Solutions
Annual Monetary Policy Fact Sheets: Internal and External publication for guests and for induction
Broadcast press conferences live (internet, TV & radio)
Monetary Forums (already in use in
Kenya)
Introduce Monetary Policy School /
University Challenges (in use in South Africa)
Record press conferences and post on website
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Conclusion For effective monetary policy communication,
I have 5 main recommendations; 1. Use local languages more
2. Concerted and continuous media training3. Continuous public awareness initiatives
4. Re-positioning the website5. ITL ushered us into a new era, requiring a more
complex approach to communication We should not be afraid of debate; we should
stimulate public debate04/15/2023 20