Central bank transparency and the interest rate channel: Evidence from emerging economies

This paper highlights the essential role of central bank transparency in the transmission mechanism of monetary policy through the interest rate channel for emerging economies. It has been shown that when the central bank's monetary policy is more transparent, the transmission mechanism of that monetary policy is more effective. Highly transparent central banks do not need to be aggressive in their policy rate actions in order to more effectively produce output and price dynamics implied by monetary policy shocks.