is vital, as market rates are not determined solely by the prevailing policy rate but are also forward - looking : they are always largely dependent on the expected interest rate moves by the central bank over the coming weeks and months. in finland, for instance, most housing loans are tied to the 12 - month euribor, which is clearly more dependent on interest rate expectations than on the level of the ecb's policy rate. news on monetary policy mostly tends to focus on the interest rate decision made each time. the interest rate decision is not, however, the whole story of monetary policy, as central banks in fact dispose of two at least slightly differing instruments – the prevailing level of the policy rate and expectations of the future interest rate level. expectations of the future interest rate level are not only influenced by the prevailing interest rate but also by the information the central bank provides on its interest rate decisions and on its areas of concern as well as by the monetary policy framework within which the central bank operates. in the case of the european central bank, the monetary policy framework is reflected in the strategy published by the ecb. the strategy provides an organised framework for monetary policy presentation at the governing council of the ecb and for the post - meeting explanatory note, known as the introductory statement. the strategy is composed of two pillars, the one covering an economic analysis of inflationary pressures, including euro area macroeconomic projections, and the other a monetary analysis providing information on inflationary pressures as reflected in monetary and credit developments. one of the purposes of the strategy is to enhance the transparency of ecb policy. the two pillar structure has occasionally been criticised by researchers. it has been considered ambiguous, and it is certainly so compared with the taylor rule. the monetary analysis has also recently been less popular among researchers than it used to be. i however believe that the strategy in its present form is useful for the purposes of policy transparency, as the governing council naturally needs to focus attention not only on the real economy but also on the development of the money and credit markets. overlooking this would not increase policy transparency. in past years, central banks often sought to make their interest rate decisions unexpectedly and even considered it a matter of honour. transparency in central bank policy has however been increased systematically in recent years. this has been made in an effort to contribute to a stable and smooth functioning of the money market. central banks, as also the markets and the media, presently take a highly serious attitude towards the form

and content of communication on topical monetary policy issues, as what is told about interest rates is almost equally important as what is done with them. for the present, however, i am not in a position to mention any more about transparency in interest rate policy, as the purdah period, a period during which the members of the governing council of the ecb refrain from making any comment, starts one week before each governing council meeting.