There is a traditional belief that monetary authories have to be enigmatic, and that market participants have to then zealously watch the central bank to pick up crumbs of information and decipher cryptic clues. The transition from Greenspan to Bernanke, with a market that has to learn a whole new style of communication, has highlighted the poor institutional structure of US monetary policy. In a Bloomberg column a while ago, Andy Mukherjee had pointed out that the phrase "unfolding constellation of uncertainties" used by RBI had never before been seen by google. The recent RBI rate hike was a surprise to markets because there was no scheduled monetary policy meeting.
In an article Plain english versus mumbo jumbo in Business Standard today, I argue that modern monetary economics involves a powerful move towards central banks that speak in plain english and are transparent. In a well functioning monetary regime, market participants would only zealously watch the economy, not the central bank. Sound institutions involve a nuanced relationship between data releases, rules, and rate changes.