Anita Angelovska Bezoska: Journalists are one of the main
transmitters of monetary policy messages
Address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of
Macedonia, at the Journalist Workshop - 2018, organized by the National Bank of the Republic of
Macedonia, Skopje, 25 December 2018.
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Distinguished media representatives,
Welcome to the fourth Journalist Workshop hosted by the NBRM. I am glad to see you in
greater numbers this year, which is confirmation of your interest in the topics that will be
the focus of today's event.
Allow me to take a brief look at several basic, yet important aspects of central bank
communication:
1. Why is central bank transparency and communication important and needed?
2. How has central bank communication evolved over the years? What were the challenges in
the period after the outbreak of the global crisis and how were they addressed globally?
3. Challenges in central bank communication in the Republic of Macedonia.
A comparison between the current and the past transparency level and central bank
communication shows an exceptional transformation in this segment. The need for
strengthening central bank transparency was brought to the fore for the first time in the 1990s,
implying enhanced communication with the public, including the media. This change is
associated with the concept of central bank independence, or the independence of the
monetary policy from fiscal policy. Namely, high inflation in the 1970s, feed by the inflationary bias
of the discretionary fiscal policy, drew a clear distinction between monetary and fiscal policy
objectives and instruments by granting a high level of central bank independence, on the one
hand, and setting fiscal rules, on the other. The aim was to eliminate any monetary financing of
governments and their excessive borrowing, which, as witnessed in the past, could lead to high
price volatility.
Alongside the concept of enhanced independence, greater central bank responsibility
was required, which is also achieved with greater transparency. This required introduction
of different communication and information on the policy conduct, and on central bank data and
positions, assessments and expectations for the economic variables. At the end of the last
century, the central bank community realized that besides performing its function effectively, it
can also fully achieve its independence, only if it applies higher level of transparency and
developed communication within its mandate.
Yet another factor that emphasizes the need for greater central bank transparency is the
financial market liberalization in the 1990s. The perception and theory that the monetary
policy is more effective if the central bank systematically surprises the markets has long been left
to oblivion, as it became clear that bringing policies through surprises and isolated steps cannot
have a lasting effect on the economy. The financial market liberalization made the monetary
policy effectiveness increasingly dependent on market expectations for the interest rate policy,
which additionally raised the need for developed central bank communication with the public to
the degree of necessity. As an illustration of the central bank communication in the past, and
what it is today, I would remind you that the world's largest central bank - the FED, publicly
announced the decision on interest rates for the first time in 1994. Today, it seems unreasonable
for a central bank not to announce its decision on the interest rate.
The recent global economic crisis has once again affirmed the necessity of developed
communication and transparency and has been an incentive for many central banks to
Today, as the ECB President,
ensure proactive approach in promoting their transparency.
Mario Draghi, emphasized, "the central bank communication is actually a monetary policy tool in
itself". Besides the numerous monetary instrument innovations aimed to stabilize the financial
markets and encourage the economy, central banks have begun to struggle to improve the
quality and quantity of communication of their measures, including their future measures.
Namely, the central banks not only tried to better explain the measures they took and the reasons
for doing this, but also reported on the future measures (monetary policy set-up), which is an
important novelty in the central banking operations.
Why is all this necessary? Effective communication will enable all economic agents to better
understand the reasons and the goal, and thus encourage their proper behavior for achieving the
goals. Unclear or poor communication, in turn, may jeopardize the achievement of the underlying
goals, since central banks do not directly influence the goals, but should influence the behavior of
economic agents to achieve the goal. For example, the central bank cannot directly influence
inflation, but through its measures - reducing the interest rate, or increasing liquidity in the
economy - can stimulate banks to improve the financing terms, but also borrowers to increase
demand, which will move the demand for goods and services in the desired direction and
achieve the inflation target. in the central banking community does confirm
Empirical research
that, globally, the central bank communication is key to maintaining a low level or reducing
inflation and in many cases even reducing instability in the real economy.
Communication is an ongoing challenge for central banks. It is undisputed that effective
central bank communication will always be marked by certain flexibility and adaptability,
depending not only on the economic environment, but also on the public interest and trends in the
communication and information networks and media, which, due to the development of
technology and digitization, are changing, advancing and improving on a daily basis.
The constant strengthening of transparency, that is, the promotion and development of
communication with the public, including media, is a challenge for the National Bank of
the Republic of Macedonia. We work diligently to respond to the challenge, while paying
attention to the two points of communication - immediate communication with the public and
communication with the media. We do our best to follow the best practices of the European
central banking union, which is largely confirmed with the assessments of our
transparency. In doing so, we not only struggle to increase intensity, but also quality of our
communication. Here I would mention the practice of constantly improving the quality of
information and analyses we publish, improving the methodological explanations for the statistics
that we publish, timely informing of all novelties in statistical surveys, improving the structure of
our website, concurrent publishing of statistics and statistical press releases for their
explanation, providing international comparability of our data through continuous implementation
of international standards. In this regard, we are in the final stage of creating an analytical tool for
easier access and search of statistics by all external users. We hope that our commitment is
noticeable for you as media representatives, who analyze our work on a daily basis, by following
the press releases, data and positions that arise from the central banking operations in the
country.
For us, you, the journalists, are one of the main conveyors of monetary policy messages
to the public. Not as our spokespersons, but as individuals and professionals respected by the
public, who daily follow our work, which is very often presented in tables, graphs, reviews and
data series that almost always require focused reading and analysis before being commented.
The same focus is required for our reports, where even footnotes contain important data that
ensure analytical and studious rather than only informative reporting. Accurately and precisely
communicated or analyzed data is crucial for timely and professional information to the public.
Unfortunately, even unintentionally inaccurate or incomplete communication or analysis of central
bank data and views, especially in times when the information/news are transmitted at the speed
of light, can create undesired environment for the economy, especially if it creates an
unreasonable panic among the public. Comprehensive and thorough communication requires
understanding of many methodological aspects, information and data that the NBRM uses, and
which we feel obliged to supply you with through our communication.
Among other things, guided by our firm commitment to social responsibility, for several
years now we have hosted this workshop, which becomes a tradition. This year's
workshop has a different format, which is the result of our attempt to follow your interest, as well
as your recommendations expressed during the successful cooperation so far. It will be focused
on two very important, but so far insufficiently covered topics - the Lending Survey and the
profitability of the banking sector.
I am sure that in the period ahead, we will raise the level of transparency, by promoting the
way, the form and the channels of communication, and we will always make sure that we are
socially responsible institution whose communication with the media representatives will be at
the highest professional level and will be an example for others. I believe that we will succeed in
this by mutual correctness, respect and professionalism.
I wish you a pleasant, successful and fruitful workshop.