Transparency in monetary policy

Transparency in monetary policy refers to the clarity and openness with which a central bank communicates its decisions and economic outlook. When a central bank, like the Federal Reserve, shares information about its goals, strategies, and economic forecasts, it helps the public, investors, and businesses make informed decisions. This openness can reduce uncertainty and build trust, leading to more stable financial markets and better economic outcomes. Essentially, by being transparent, central banks aim to enhance their effectiveness and promote confidence in the economy.