Challenges of Monetary Policy Communication:
Bank of Uganda Experience
By Kelvin Kizito Kiyingi
October 2012
Introduction
Who is Kelvin Kizito Kiyingi?MABJ, Reuters FellowCity University of New YorkPost Bank, Communication Manager U.S. Embassy Kampala, Information Assistant Bank of Uganda, Assistant Director,
Communications Department
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Outline
Monetary Policy Decision Making at BoU
Content and Structure of BoU’s Monetary
Policy Communication
Background: New Monetary Policy Framework
Challenges
Conclusion04/13/2023 3
New Monetary Policy Framework
In July 2011, Bank of Uganda introduced Inflation Targeting lite (ITL) monetary policy framework, replacing monetary aggregate targeting.
ITL more discretion on the part of policy makers than monetary aggregate targeting.
Therefore, credibility and transparency play important roles
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New Monetary Policy Framework
Sensitization workshops/seminars for key
stakeholders.
Use of the policy rate, the Central Bank Rate.
High Inflation, Depreciating Exchange Rate.
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Monetary Policy Decision Making at Bank of Uganda
Daily Financial Markets Operations Sub-Committee Meeting Chaired by Deputy Governor
Technically this committee does not make monetary policy decisions, it only implements
Weekly Monetary Policy Committee (MPC) Meeting Chaired by Governor
Key Monthly MPC which sets CBR, key meeting for taking decisions
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Monetary Policy Communication Functions
External Communication Enhance the effectiveness of Monetary Policy
decisions Contribute to the credibility of Central Bank
Internal Communication Build a better understanding amongst Central
Bank staff, management and board
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Content & Structure of BoU’s Monetary Policy Communication
Monthly Monetary Policy Statement
One hour after MPC In-depth
explanation Forecast of inflation Media engagement Media with EDR
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Content & Structure of BoU’s Monetary Policy Communication
The Media Publishing the Monetary Policy
Statement verbatim in key newspapers Placing articles in the press Talk shows both on Radio & Television Press interviews
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Content & Structure of BoU’s Monetary Policy Communication The Media Since the introduction ITL, the media devotes
much more attention to monetary policy. CBR is “visible” in a way that monetary
aggregates are not Everybody knows/sees interest rates.
Therefore bound to attract more attention
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Content & Structure of BoU’s Monetary Policy Communication
Website Social Media Statements Policy Reports Exchange
Rates
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External Tools
Monetary Policy
Website
Media Training
Money Museum
Outreach Programmes
Monetary Policy Reports
Placements
Monetary Policy Statements
Radio/TV Talk Shows
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Internal Tools
Intranet• Statements• Rates
E-mails• Interpretations• Information
Exchanges• Knowledge
Sharing • Internal Forums
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Challenges of Monetary Policy Communication
Language Official/business language is English The functional literacy in English is
limited Over 40 languages in Uganda
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Challenges of Monetary Policy Communication
Lack of informed debate Low economic and monetary literacy
levels Little understanding of the demand
management concept: Private Consumption; Private Investments; Government Spending; Exports
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Challenges of Monetary Policy Communication
Lack of informed debate contd. Lack of understanding of BoU’s role amidst a
liberalised environment Failure to understand difference between
monetary and fiscal policy Relationship between interest rates, exchange
rate and inflation
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Challenges of Monetary Policy Communication
Lack of informed debate contd. Limited knowledge what macroeconomic
policy can do and cannot do Paucity of independent institutions which can
contribute informed analysis, forecast etc...
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Challenges of Monetary Policy Communication
Website & Social Media Limited bandwidth Internet Access Social hubs, You tube No Mobile phone version of BoU website
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Challenges of Monetary Policy Communication
(Play a video from BoU website: Optional)http://www.youtube.com/watch?v=JqmyKA8s
f0I&feature=player_embedded#t=20sVideo Slide: A Clip of Governor, Bank of
Uganda, Professor Emmanuel Tumusiime-Mutebile, addressing a press conference at which the Monetary Policy Statement for September 2012 was issued.
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Challenges of Monetary Policy Communication
The Media Lack of qualified business journalists Limited interpretative reporting Business sections are heavily influenced
by advertising from big companies
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Challenges of Monetary Policy Communication
Dual Role Perhaps the biggest challenge informing and
educating concurrently Lack of monetary policy communication capacity Under the ITL framework, convincing the public
what will happen over the next few months Convincing the public the most likely outcome and
therefore the interest rate decision is the most correct one.
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Challenges of Monetary Policy Communication
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During tough times
Some want both low interest rates, low inflation and a strong shilling at the same time.
Deputy Governor wrote
Proposed Solutions Monetary Policy Fact Sheets: Once a year, to
use as publication for guests and for induction. (Internal and External)
Recordings of press conferences and posting the entire transcript on the website
Live broadcast (internet, television and radio)Coverage of press conferences
Monetary Forums (already in use in Kenya) Introduce Monetary Policy School/University
Challenges (already in use in South Africa).
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ConclusionFor effective communication of monetary policy I
recommend five main things: Use of more local languages Concerted and continuous media training Continuous public awareness initiatives Re-positioning of the website We are entering a new era with ITL, which requires a
much more complicated communication approach. We should not be afraid of debate; we should
stimulate public debate.
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Questions
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