This paper empirically investigates the impact of the Bank of Korea(BOK)
communication on expectations about monetary policy rate. First, the BOK
communication index is measured by the methodology of Eijffinger and
Geraats(2006). Using this index, the effects of the communication on
expectations about the BOK policy rate in terms of accuracy and homogeneity
are investigated. Empirical results show that an increase in the BOK
communication index has a statistically significant and positive impact on
forecasting accuracy, but it has no significant impact on forecasting
homogeneity. This implies that the BOK communication might have a positive
influence on the effectiveness of monetary policy by improving expectations
about the BOK policy rate.