Inflation targeting, transparency and interest rate volatility: Ditching "monetary mystique" in the UK

Monetary authorities often seem reluctant to discuss the conduct of monetar y policy. There is a concern that greater openness in monetary policy-makin g mw lead to volatility in financial markets, and specifically in interest rates. Although there is very little direct empirical evidence examining th is concern, recent changes in the monetary policy framework of the U.K. pro vide an opportunity to gain some insight. Interestingly, the evidence sugge sts that even though volatility has indeed risen in the recent past in the U.K. there is no evidence that this volatility is directly attributable to increased information flows per se.