Credibility gains from communicating with the public: evidence from the ECB’s new monetary policy strategy

Michael Ehrmann, Dimitris Georgarakos and Geoff Kenny

No 2785, Working Paper Series from European Central Bank

Abstract: We show that the announcement of the ECB’s Strategy Review and the revision of its inflation target in summer 2021 went largely unnoticed by the wider public. Although it is hard to reach out to this group, we find evidence that communicating key elements of the strategy can enhance the perceived credibility that price stability will be maintained in the medium-term. Randomised information treatments reveal that providing additional explanations about monetary policy’s stabilising role has the strongest positive impact on credibility, boosting credibility also among the less financially literate and generating more persistent credibility gains, even after inflation increased. JEL Classification: E52, E58, E31

Keywords: central bank communication; Consumer Expectations Survey; credibility; financial literacy; randomised control trial (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-fle and nep-mon
Note: 203739
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232785

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