Challenges of Monetary Policy Communication:

Bank of Uganda Experience

October 2012

A Presentation made at the Bundesbank Public Relations Seminar

By Kelvin Kizito Kiyingi

Introduction

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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

Outline1. Background: New Monetary Policy

Framework2. Monetary Policy Decision Making at Bank of

Uganda (BoU)3. Content and Structure of BoU’s Monetary

Policy Communication4. Challenges5. Conclusion

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New Monetary Policy Framework

In July 2011, BoU introduced Inflation Targeting lite (ITL) monetary policy framework,

replacing monetary aggregate targeting

ITL requires more discretion on the part of policy makers

than monetary aggregate targeting

Therefore, credibility and transparency play important

roles

Sensitization workshops/seminars for key

stakeholders

Use of the policy rate, the Central Bank Rate (CBR)

Focus on high inflation and depreciating exchange rate

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Monetary Policy Decision Making

Daily Financial Markets Operations Sub-Committee Meeting Chaired by Deputy Governor (does not make monetary policy decisions, it only implements)

Weekly Monetary Policy Committee (MPC) Meeting Chaired by Governor

Monthly MPC which sets CBR key meeting for taking decisions

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Monetary Policy Communication Functions

Enhance effectiveness of Monetary Policy decisionsContribute to the credibility of Central Bank

Build better understanding amongst Central Bank staff, management and board

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External Communications

Internal Communications

Content & Structure

Monthly Monetary Policy Statement

• One hour after MPC• In-depth explanation• Forecast of inflation• Media engagement

• Media with EDR

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Content & StructurePublish Monetary Policy Statement verbatim in key

newspapers

Place articles in the press

Talk shows both on Radio & Television

Press interviews

With ITL, media devotees pay

more attention to monetary policy

CBR “visible” in a way monetary

aggregates are not

Audiences familiar with interest rates

so CBR attracts more attention

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The Media

Content & Structure

The Website • Social Media• Statements• Policy Reports• Exchange Rates

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Content & Structure

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• Awareness• Institutions• Business

Community• Schools• Museum

External Tools

Monetary Policy

Website

Media Training

Money Museum

Outreach Programmes

Monetary Policy

Reports

Placements

Monetary Policy

Statements

Radio/TV Talk Shows

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Internal Tools

Intranet• Statements• Rates

E-mails• Interpretations• Information

Exchanges

• Knowledge Sharing

• Internal Forums

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Challenges

Language

Official/business language is

English

Functional literacy in

English is limited

Over 40 languages in

Uganda

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ChallengesLack

• Low financial literacy levels• Little understanding of the demand management concept; Private Investments;

Gov’t Spending; Exports

of

• Lack of understanding of BoU’s role amidst a liberalised environment• Differentiating between monetary and fiscal policy

Informed

• Relationship between interest rates, exchange rate and inflation• Limited knowledge of what macroeconomic policy can and cannot do

Debate

• Paucity of independent institutions which can contribute to informed analysis, forecast, etc.

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Challenges

Website & Social Media

Limited bandwidth

Internet access

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ChallengesO

ption

al

Play video from BoU site; http://www.youtube.com/ watch? v= JqmyKA8sf0I & feature=player embedded#t=20s

Vide

o Cl

ip

Governor Bank of Uganda, Professor Emmanuel Tumusiime Mutebile, addresses press conference at which Monetary Policy Statement for September 2012 was issued

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Challenges

The Media

Lack of qualified business

journalists

Limited interpretative

reporting

Business sections heavily influenced

by advertisers

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Challenges

Dual RoleInforming and

educating concurrently

Lack of monetary policy

communication capacity

ITL Framework

Convincing public of most likely outcome over

next few months

Convincing public the interest

decision is the best one

Tough Times

Some want low interest rates & inflation as well as strong shilling

Dep. Gov wrote an article

addressing this in a national daily

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Proposed Solutions

Annual Monetary Policy Fact Sheets: Internal and External publication for guests and for induction

Broadcast press conferences live (internet, TV & radio)

Monetary Forums (already in use in

Kenya)

Introduce Monetary Policy School /

University Challenges (in use in South Africa)

Record press conferences and post on website

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Conclusion For effective monetary policy communication,

I have 5 main recommendations; 1. Use local languages more

2. Concerted and continuous media training3. Continuous public awareness initiatives

4. Re-positioning the website5. ITL ushered us into a new era, requiring a more

complex approach to communication We should not be afraid of debate; we should

stimulate public debate04/15/2023 20

Questions

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