Business Standard

Policy evolution: Despite challenges, central banks must keep adapting

Most large central banks have been grappling with high inflation rates over the past couple of years after having misjudged the early warning signs

central banks, rbi, us fed
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Illustration: Ajay Mohanty

Business Standard Editorial Comment

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“I guess I should warn you. If I turn out to be particularly clear, you’ve probably misunderstood what I said,” former Federal Reserve chairman Alan Greenspan famously remarked in 1988. A lot has changed since then in the world of central banking. No senior official of any large central bank wants to be even remotely misunderstood by financial markets. In fact, they go to great lengths to ensure clarity, and policy decisions are carefully telegraphed. Communication has become an important tool, which is used, particularly by large central banks, to shape expectations and prepare markets to absorb

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