Market Information and Signaling in Central Bank Operations, or, How Often Should a Central Bank Intervene?

Download or read book Market Information and Signaling in Central Bank Operations, or, How Often Should a Central Bank Intervene? written by International Monetary Fund and published by International Monetary Fund. This book was released on 1997-03-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: A central bank must decide on the frequency with which it will conduct open market operations and the variability in short-term money market that it will allow. It is shown how the optimal operating procedure balances the value of attaining an immediate target and broadcasting the central bank’s intentions against the informational advantages to the central bank of allowing the free play of market forces to reveal more of the information available to market participants.