# Policy of open mouth

- Canonical URL: https://www.gerhardmerk.de/policy-of-open-mouth
- Post ID: 592123
- Modified: 2023-07-25T21:12:37+00:00
- Language: en

## Definition

The central bank announces its measures more or less clearly to the public in advance, primarily through its president. The advantages, namely that the markets can prepare themselves in good time for corresponding interest rate steps, and the disadvantages, such as above all: - the decision-making bodies are disempowered, - the danger of different voices from within the central bank becoming loud, - the central bank runs the risk of becoming a slave to the press, have been and are still the subject of controversial debate. - From the very beginning, the ECB justified its monetary policy decisions immediately after each meeting of the Central Bank Council, and usually in great detail. This information policy has since become the model for most central banks in the world. - See briefcase indicator, information, market-sensitive, code words, ECB minutes, publication, monetary policy, forward guidance, guidance, verbal, Greenspeak, restrictive tendency, signaling effect, stealth policy, fuzziness, constructive. - Cf. Deutsche Bundesbank Monthly Report of June 2004, p. 23 (dangers of a "back and forth"), ECB Monthly Report of January 2006, p, 59 ff. (predictability of the ECB's monetary policy; detailed exposition with many overviews), ECB Monthly Report of April 2007 ff. (detailed, textbook exposition), ECB Monthly Report of November 2009, p. 77 ff. (central bank communication in times of turbulence: detailed exposition). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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