The role of financial journalists in the expectations channel of the monetary transmission mechanism

Abstract

Monetary policy relies on managing the inflation expectations of the public in order to influence prices (inflation). Relying on the South African experience we argue that most of the general public are only exposed to the communication of the South African Reserve Bank (SARB) via the media. This state of affairs is fairly typical around the globe. We explore the role and biases of the journalists in transmitting the SARB's communication to the rationally inattentive general public. Our aim is to obtain insights about the factors that influence media articles that deal with monetary policy issues. Using interviews and qualitative content analysis, we explore the extent of the journalists' knowledge about inflation and monetary policy, their views concerning the credibility of the SARB, the sources of information they use, and the constraints and incentives they face in writing the articles.

The Effects of Monetary Policy on Macroeconomic Variables through Credit and Balance Sheet Channels: A Dynamic Stochastic General Equilibrium Approach

“…The evolution of macroeconomic perspectives on the monetary transmission mechanism shows that the effects of monetary policy on real output and inflation have changed dramatically in recent decades [10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25][26][27][28]. The study of monetary policy is important, not only in terms of its impact on economic variables, but also in terms of helping monetary decision makers and policymakers to evaluate economic policies more accurately .…”

Exploring the network of individuals that influence the media's inflation message in South Africa

“…The news media (from here on referred to as the media) is not a passive channel for monetary policy information (Reid et al 2021). Berger et al (2011), for example, reveal that the content of media reporting across the eurozone is highly sensitive to the type and content of European Central Bank's (ECB's) communication.…”

“…Reid and Du Plessis (2011) find the same for South Africa. Furthermore, in the South African context, Reid et al (2021) emphasize that the media's goals do not always align with those of the central bank. Hence, the message the central bank communicates is not always the message the public receives through the media.…”