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Simon Mee

21 September 2021
OCCASIONAL PAPER SERIES - No. 274
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Abstract
This paper examines the importance of central bank communication in ensuring the effectiveness of monetary policy and in underpinning the credibility, accountability and legitimacy of independent central banks. It documents how communication has become a monetary policy tool in itself; one example of this being forward guidance, given its impact on inflation expectations, economic behaviour and inflation. The paper explains why and how consistent, clear and effective communication to expert and non-expert audiences is essential in an environment of an ever-increasing need by central banks to reach these audiences. Central banks must also meet the demand for more understandable information about policies and tools, while at the same time overcoming the challenge posed by the wider public’s rational inattention. Since the European Central Bank was established, the communications landscape has changed dramatically and continues to evolve. This paper outlines how better communication, including greater engagement with the wider public, could help boost people’s understanding of and trust in the Eurosystem.
JEL Code
E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
30 July 2020
ECONOMIC BULLETIN - BOX
Economic Bulletin Issue 5, 2020
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Abstract
This box examines the impact of the ECB’s monetary policy measures taken in response to the coronavirus (COVID-19) crisis, focusing on asset purchases and the targeted longer-term refinancing operations (TLTRO III). It outlines how the ECB’s response centred on addressing three key issues: (i) market stabilisation, (ii) providing central bank liquidity to maintain credit provision to the real economy, and (iii) ensuring that the overall monetary policy stance is sufficiently accommodative. The box sets out in detail how the ECB’s measures have indeed proved an effective and efficient response to the COVID-19 crisis, in turn providing crucial support to the real economy and to price stability across two dimensions, namely underpinning the medium-term growth and inflation outlook and removing tail risks around the baseline outlook. These measures are a proportionate response under current conditions given that the ECB’s price stability objective would have been subject to further downside risks in the absence of such measures.
JEL Code
E50 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→General
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies