Communication entails common understanding and usage of language -Gone are the days of policy decisions being shrouded in mystery
Bank of Botswana (BoB) Governor, Moses Pelaelo, has cautioned the media and policy makers to avoid unnecessary panic and confusion in the market by deliberately misreporting due to lack of understanding of some concepts.
Presenting on the ‘Importance of Communication in the Macroeconomic Policy Management, at the Kgori Capital Business Club seminar organized by the Kgori Business Press club on Tuesday, Pelaelo said the role of communication in ensuring ultimate efficacy or potency would mean higher rates of economic growth with respect to fiscal and monetary policies.
He said there was a time in history when policymaking was shrouded in secrecy where policy framework and actions were deliberately designed to shock the market.
“The language was coloured by obfuscation and ambiguity in order to generate uncertainty,” he said, also remembering the words of Former Chairman of the United States (US) Federal Reserve Bank, Allan Greenspan who once said he had learnt to ‘mumble with great incoherence since he became a central banker’. “If I seem duly unclear to you, you must have misunderstood what I said,” Pelaelo quoted Greenspan in a speech he had made in 1987.
During his presentation, Pelaelo assured attendants that things had changed as there are three pillars that support effective communication, being, “policy institutions, in the middle a vibrant and knowledgeable media, while an economically aware, participative and responsive market and economic agents are the third,” he noted.
The Central Bank Governor also noted that effective communication also entails common understanding and usage of language.
He stressed that there is a need, on the part of policy-setting institutions, for consistency in definitions, in the meanings of adjectives attributed to magnitudes of changes and movements in economic indicators as well as the wording or interpretation of policy action or non-action.
“… such common language is accepted and used by the media, policy analysts and commentators, it becomes a tool in policy formulation that has an intended impact on economic decision making,” said Pelaelo before adding that the misreporting could cause unnecessary confusion in the market and prove disadvantageous to the implementation of macroeconomic policies.
Pelaelo concluded by stating that communication also entails proper identification of spokespersons for the policy setting institutions and matters on which they are responsible.
“A proper arrangement in this regard promotes credibility and effectiveness of policy communication,” he clarified.
The BoB Governor also reminded attendants that information dissemination platforms are an integral part of policy effectiveness and they determine the reach and credibility of macroeconomic policy.