Monetary Policy Communication: Perspectives from Former Policy Makers at the ECB

Ehrmann, Michael; Holton, Sarah; Kedan, Danielle; Phelan, Gillian

doi:10.2139/ssrn.3988518

Cited by 7 publications

(7 citation statements)

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“…Furthermore, monetary policy communication needs to adapt to evolving trends in digital communication channels and be able to rapidly respond to unexpected shocks like COVID-19 and heightened uncertainty (see Ehrmann et al. , 2021).…”

Section: Discussionmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

“…We focused on the 10 most popular words because of the interpretation ease, comparability and visualization purposes. Moreover, 10 is a typical number of analyzed top-words or topics used in text-mining studies (Alfieri & Gabrielyan, 2021;Ehrmann et al, 2021;Ferrara et al, 2022). Moreover, we conducted an additional PCA to answer which financial stability word differentiates IRs to the greatest extent.…”

Section: Financial Stability In Inflation Reportsmentioning

confidence: 99%

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Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Kurowski,

Smaga

2023

CEMJ

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PurposeFinancial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies remains unclear. In this study, the “soft” approach to such policy mix was tested – how often monetary policy (in inflation reports) analyses financial stability issues. This paper aims to discuss the aforementioned objective.Design/methodology/approachA total of 648 inflation reports published by 11 central banks from post-communist countries in 1998-2019 were reviewed using a text-mining method.FindingsResults show that financial stability topics (mainly cyclical aspects of systemic risk) on average account for only 2%of inflation reports’ content. Although this share has grown somewhat since the global financial crisis (in CZ, HU and PL), it still remains at a low level. Thus, not enough evidence was found on the use of a “soft” policy mix in post-communist countries.Practical implicationsGiven the strong interactions between price and financial stability, this paper emphasizes the need to increase the attention of monetary policymakers to financial stability issues.Originality/valueThe study combines two research areas, i.e. monetary policy and modern text mining techniques on a sample of post-communist countries, something which to the best of the authors’ knowledge has not been sufficiently explored in the literature before.

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Section: Discussionmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Financial Stability In Inflation Reportsmentioning

confidence: 99%

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Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Kurowski,

Smaga

2023

CEMJ

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“…Perhaps because they recognize this, central banks increasingly refer to public trust to motivate their communications with the general public. Indeed, a recent survey of former ECB policymakers finds that enhancing credibility and trust is seen as the main objective of monetary policy communication (Ehrmann, Holton, Kedan, and Phelan 2021). The ECB's current president, Christine Lagarde, even views the general public as the "new frontier" for central bank communication, arguing that: "Central banks have to be understood by the people whom they ultimately serve.…”

Section: Does Central Bank Communication Enhance Public Trust In the ...mentioning

confidence: 99%

Central Bank Communication with the General Public: Promise or False Hope?

Blinder,

Ehrmann,

de Haan

et al. 2024

Journal of Economic Literature

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Central banks are increasingly reaching out to the general public to motivate and explain their monetary policy actions. One major aim of this outreach is to ensure accountability and create trust; another is to guide inflation expectations. This article surveys a rapidly growing literature on central bank communication with the public, rather than with the financial markets. We first discuss why such communication matters and is more challenging than communicating with expert audiences. Then we turn to methods: How do central banks try to reach the public, and do they succeed? Next, and importantly, we survey the empirical evidence on the extent to which this new outreach affects inflation expectations. On balance, we see some promise in the potential to inform the public better, but many challenges along the way. (JEL D83, D84, E31, E52, E58, G53)

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“…The need for improving communication with the general public is also shared by former members of the ECB's Governing Council surveyed in Ehrmann et al. (2022). The results of this survey show that the large majority of these former ECB policy makers consider the communication with the general public as inadequate and see substantial room for improvement in this area.…”

Section: Central Bank Facebook Linkedin Twittermentioning

confidence: 99%

Central bank communication and social media: From silence to Twitter

Masciandaro

Peia

Romelli

2023

Journal of Economic Surveys

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This paper discusses the evolution of central bank communication, focusing on recent efforts by central banks to engage with a wider audience via social media. We document the social media presence of major central banks and discuss how analyzing Twitter content by and about monetary policy makers can inform about the effectiveness of communication in influencing beliefs. We focus on recent techniques employed in analyzing social media content in order to understand how central bank communication affects expectations and, subsequently, behavior in financial markets.

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Monetary Policy Communication: Perspectives from Former Policy Makers at the ECB

Cited by 7 publications

References 51 publications

Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Central Bank Communication with the General Public: Promise or False Hope?

Central bank communication and social media: From silence to Twitter

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