1986 world cup game ( in fact, that game became famous for maradona ’ s first goal ). 13 maradona did it by fooling the english defence into thinking that he would move in different directions, instead of going through a straight line. central banks cannot even try to act in this way. first, market participants are much smarter than the english defence and cannot be easily fooled. and even when they are fooled, they get back at you in a rather painful way. i thus much prefer an earlier quote of mervyn, in which he refers to milton friedman ’ s 1968 presidential address, according to which “ successful monetary policy should be boring, and successful central bankers should be seen neither as heroes nor villans, but simply as competent referees, allowing the game to flow and staying out of the limelight ”. 14 for central bankers to stay out of the limelight in the present circumstances, with an oil shock as the one we are currently experiencing, we need the cooperation of all, from unions to employees, from market participants to budgetary authorities. it depends largely on them. thank you for your attention. see hetzel ( 2000 ). see for example gerdesmeier and roffia ( 2004 ). see, among others, giannone, reichlin and sala ( 2002 ). this is related to the idea that once an instrument is used effectively to influence a target variable, the correlation between the two disappears. this is sometimes referred to as “ goodhart ’ s law ”. see m. king ’ s mais lecture ( 2005 ). see m. king ( 1998 ). 6 / 6

monetary conditions. the opposite example may arise if market participants expect the central bank to tighten sooner than what the central bank instead deems appropriate. this may happen in particular when the central bank expresses concern about potential inflationary risks which have nevertheless not yet materialized. if the central bank does not tighten as expected, market participants may be disappointed and lose confidence in the anti - inflationary stance of the central bank ( “ barking without biting ” ). here, again, the central bank has to communicate to market participants why it believes that it is not appropriate to raise rates in light of its own assessment of fundamentals. it is not easy to explain at the same time that there is no immediate need to change rates but that there is readiness to do so if risks materialise. the word “ vigilance ” has been used to describe attention to risks to the baseline scenario, rather than a determination to implement a specific unconditional policy action. when the risks do materialize, vigilance stops and action starts. see bernanke and woodford ( 1997 ) on the risks stemming from an excessive reliance on market forecasts in setting monetary policy. 4 / 6 vigilance can thus be communicated to the public even if policy rates remain unchanged, in particular if risks emerge or increase but have not materialised and if underlying developments justify the no - change option. this explains why communication intensity can at times increase, as measured by what some call “ hawkish - ness ” indicators, while policy rates remain unchanged, as happened in the first half of 2004. 6 if the communication strategy is successful, expectations converge over time back to the level of unchanged policy rates. institutional constraints for monetary policy the main objective of communication policy is to make monetary policy predictable. there are not many analyses looking at the predictability of central banks. those that i have seen suggest that central banks of major countries have achieved a high degree of predictability in recent years, and are performing quite similarly in this respect. 7 analyses tend to focus more on the means and instruments to achieve predictability, than the result itself. these analyses often fail to take into account the institutional and political context in which different central banks operate. they also at times entail the risk of suggesting superficial and naive prescriptions that are simply not realistic, not because the central bank does not want to implement them prescriptions, but because they are not available within the prevailing institutional or political set up. i would like to touch briefly upon this issue because i