Abstract:

With the coming of information age, the gradual improvement in information-processing capabilities and the demand reduction in money base are questioning the monetary policy effectiveness and the ability of the central bank to influence the financial market. In fact, the monetary transmission mechanism and the central bank's approach to the influence on whole economy have changed in the age of information economy. The expectation management or expectation channel will play an important role in carrying out an effective monetary policy, not merely controlling the money base. The demand reduction in money base can not impair the central bank's ability fundamentally, but the way to its stabilization objectives has changed into a channel system for controlling overnight interest rates.

Key words: information economy, monetary policy, overnight interest rate, expectation