Authors
Mathias Hoffmann, Emanuel Moench, Guido Schultefrankenfeld
Publication date
2023
Publisher
mimeo
Description
Combatting current record-high inflation rates and the immanent risk of expectations de-anchoring pose particular challenges which central banks have taken on by raising rates again, but also by increasingly communicating with the general public. Experimental results from two large-sample waves of the Bundesbank Online Panel Households show that the ECB’s guidance about the future course of inflation in general helps to steer households’ elevated inflation expectations closer towards target. However, while words speak louder than numbers, a picture says more than thousand words. A soothing, positively framed communication style shows large treatment effects in particular on short-term expected inflation. Yet, providing simple visualizations of the ECB’s inflation outlook substantially lowers expected inflation across all expectations horizons. This suggests that, regarding their communication, central banks …
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