A KISS for central bank communication in times of high inflation


Hoffmann, Mathias ; Moench, Emanuel ; Pavlova, Lora ; Schultefrankenfeld, Guido


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URN: urn:nbn:de:bsz:180-madoc-707318
Document Type: Working paper
Year of publication: 2025
The title of a journal, publication series: ZEW Discussion Papers
Volume: 25-031
Place of publication: Mannheim
Edition: This draft: June 3, 2025
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: E31 , E52 , E32,
Keywords (English): inflation projections , Central Bank Communication , inflation expectations , randomized control trial , survey data
Abstract: During the post-pandemic inflation surge, many central banks actively used communication about the inflation outlook as a policy tool to limit spillovers from realized to expected inflation. We present novel survey evidence showing that the ECB's guidance about the projected inflation path substantially lowers households' inflation expectations in times of unusually high inflation. A reassuring, positively framed non-quantitative communication style has the largest treatment effects on short-term expected inflation. Providing simple visualizations of the ECB's projected inflation path also significantly lowered inflation expectations across horizons. We document substantial heterogeneity of these effects along key socio-demographic characteristics. Our findings suggest that, regarding their communication, central banks should 'keep it sophisticatedly simple (KISS)'.




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