We develop and estimate a general equilibrium model to assess the effects and welfare implications of central bank transparency. Monetary policy can deviate from active inflation stabilization, and agents conduct Bayesian learning about the nature of these deviations. Under constrained discretion, only short deviations occur, agents’ uncertainty about the macroeconomy remains contained, and welfare is high. However, if a deviation persists, uncertainty eventually accelerates and welfare declines. Announcing that inflation stabilization will be temporarily abandoned raises uncertainty. However, these announcements lower policy uncertainty and curb inflationary beliefs at the end of the policy. For the United States, enhancing transparency raises welfare.