This document discusses the challenges of monetary policy communication at the Bank of Uganda. It provides background on Uganda's adoption of an inflation targeting lite monetary policy framework in 2011. It then outlines some of the key challenges in communicating monetary policy, including language barriers, low economic literacy, lack of informed debate, limited media capacity, and balancing informing the public with convincing them of policy decisions. It concludes by recommending increased use of local languages, ongoing media training, public awareness initiatives, improving the central bank website, and not being afraid of public debate.

1. Challenges of
Monetary Policy Communication:
Bank of Uganda Experience
October 2012
By Kelvin Kizito Kiyingi

2. Introduction
Who is Kelvin Kizito Kiyingi?
MABJ, Reuters Fellow
City University of New York
Post Bank, Communication Manager
 U.S. Embassy Kampala, Information Assistant
 Bank of Uganda, Assistant Director,
Communications Department
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3. Outline
Monetary Policy Decision Making at BoU
Content and Structure of BoU’s Monetary
Policy Communication
Background: New Monetary Policy Framework
Challenges
Conclusion
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4. New Monetary Policy Framework
In July 2011, Bank of Uganda introduced
Inflation Targeting lite (ITL) monetary policy
framework, replacing monetary aggregate
targeting.
ITL more discretion on the part of policy
makers than monetary aggregate targeting.
Therefore, credibility and transparency play
important roles
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5. New Monetary Policy Framework
Sensitization workshops/seminars for key
stakeholders.
Use of the policy rate, the Central Bank Rate.
High Inflation, Depreciating Exchange Rate.
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6. Monetary Policy Decision Making
at Bank of Uganda
Daily Financial Markets Operations Sub-
Committee Meeting Chaired by Deputy
Governor
 Technically this committee does not make
monetary policy decisions, it only implements
Weekly Monetary Policy Committee (MPC)
Meeting Chaired by Governor
Key Monthly MPC which sets CBR, key
meeting for taking decisions
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7. Monetary Policy Communication
Functions
External Communication
 Enhance the effectiveness of Monetary Policy
decisions
 Contribute to the credibility of Central Bank
Internal Communication
 Build a better understanding amongst
Central Bank staff, management and board
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8. Content & Structure of BoU’s
Monetary Policy Communication
Monthly
Monetary Policy
Statement
 One hour after MPC
 In-depth
explanation
 Forecast of inflation
 Media engagement
 Media with EDR
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9. Content & Structure of BoU’s
Monetary Policy Communication
The Media
 Publishing the Monetary Policy
Statement verbatim in key newspapers
 Placing articles in the press
 Talk shows both on Radio & Television
 Press interviews
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10. Content & Structure of BoU’s
Monetary Policy Communication
The Media
 Since the introduction ITL, the media devotes
much more attention to monetary policy.
 CBR is “visible” in a way that monetary
aggregates are not
 Everybody knows/sees interest rates.
Therefore bound to attract more attention
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11. Content & Structure of BoU’s
Monetary Policy Communication
Website
 Social Media
 Statements
 Policy Reports
 Exchange
Rates
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12. External Tools
Website
Radio/TV Media
Talk Shows Training
Monetary Monetary Money
Policy
Policy Museum
Statements
Outreach
Placements
Programmes
Monetary
Policy
Reports
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13. Internal Tools
• Statements
Intranet
• Rates
• Interpretations
E-mails
• Information
• Knowledge
Exchanges Sharing
• Internal Forums
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14. Challenges of Monetary Policy
Communication
Language
 Official/business language is English
 The functional literacy in English is
limited
 Over 40 languages in Uganda
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15. Challenges of Monetary Policy
Communication
Lack of informed debate
 Low economic and monetary literacy
levels
 Little understanding of the demand
management concept: Private
Consumption; Private Investments;
Government Spending; Exports
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16. Challenges of Monetary Policy
Communication
Lack of informed debate contd.
 Lack of understanding of BoU’s role amidst a
liberalised environment
 Failure to understand difference between
monetary and fiscal policy
 Relationship between interest rates, exchange
rate and inflation
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17. Challenges of Monetary Policy
Communication
Lack of informed debate contd.
 Limited knowledge what macroeconomic
policy can do and cannot do
 Paucity of independent institutions which can
contribute informed analysis, forecast etc...
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18. Challenges of Monetary Policy
Communication
Website & Social Media
 Limited bandwidth
 Internet Access
 Social hubs, You tube
 No Mobile phone version of BoU website
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19. Challenges of Monetary Policy
Communication
(Play a video from BoU website: Optional)
http://www.youtube.com/watch?v=JqmyKA8s
f0I&feature=player_embedded#t=20s
Video Slide: A Clip of Governor, Bank of
Uganda, Professor Emmanuel Tumusiime-
Mutebile, addressing a press conference at
which the Monetary Policy Statement for
September 2012 was issued.
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20. Challenges of Monetary Policy
Communication
The Media
 Lack of qualified business journalists
 Limited interpretative reporting
 Business sections are heavily influenced
by advertising from big companies
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21. Challenges of Monetary Policy
Communication
Dual Role
 Perhaps the biggest challenge informing and
educating concurrently
 Lack of monetary policy communication capacity
 Under the ITL framework, convincing the public
what will happen over the next few months
 Convincing the public the most likely outcome and
therefore the interest rate decision is the most
correct one.
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22. Challenges of Monetary Policy
Communication
During tough
times
 Some want both
low interest
rates, low
inflation and a
strong shilling at
the same time.
 Deputy
Governor wrote
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23. Proposed Solutions
 Monetary Policy Fact Sheets: Once a year, to
use as publication for guests and for
induction. (Internal and External)
 Recordings of press conferences and posting
the entire transcript on the website
 Live broadcast (internet, television and
radio)Coverage of press conferences
 Monetary Forums (already in use in Kenya)
 Introduce Monetary Policy School/University
Challenges (already in use in South Africa).
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24. Conclusion
For effective communication of monetary policy I
recommend five main things:
 Use of more local languages
 Concerted and continuous media training
 Continuous public awareness initiatives
 Re-positioning of the website
 We are entering a new era with ITL, which requires a
much more complicated communication approach.
 We should not be afraid of debate; we should
stimulate public debate.
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25. Questions
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