The writer is a professor at Cornell University and senior fellow at the Brookings Institution
If monetary mystique is an art, the People’s Bank of China takes that to the extreme. Among the major central banks in both advanced and emerging markets, it is the only one that does not make changes to interest rates and other aspects of monetary policy linked to a predictable cycle of policy committee meetings. Instead, policy changes are made on an ad hoc basis and communicated through press release.
As the central bank of the second-largest economy and one that aspires to promote market mechanisms, this lack of transparency has many negative ramifications, both domestic and international. The PBoC’s opacity leaves financial market participants guessing about its monetary policy strategy.