Title: Credibility gains from communicating with the public: Evidence from the ECBs new monetary policy strategy
Authors: Michael Ehrmann - European Central Bank (Germany)
Geoff Kenny - European Central Bank (Germany)
Dimitris Georgarakos - European Central Bank (Germany) [presenting]
Abstract: With the rapid increase in euro area inflation, it is ever more important that the ECB maintains its credibility, also among the wider public. Although it is hard to reach out to this group, we show that explaining and communicating key elements of the ECBs new monetary policy strategy can enhance the perceived credibility that price stability will be maintained. In particular, randomised information treatments in the new Consumer Expectations Survey reveal that effective communication about the symmetric inflation target can raise credibility among survey respondents, especially if the stabilising role of monetary policy is also explained. However, the communication of a decision to take better account of climate considerations and a promise to better capture housing costs in inflation measures yield neither marginal credibility gains nor losses.