Philip R. Lane, member of the ECB Executive Board, used the London conference to stress that monetary‐policy communication is as crucial as the interest‐rate decision itself. He noted that recent ECB research using large‐language‐model measures shows the communication tone turns more hawkish during tightening phases and more dovish during easing, closely mirroring movements in the deposit‐facility rate.
The speech highlighted that extracting information from ECB policy statements can enhance forecasts of euro‐area core inflation by several quarters, even after accounting for the Eurosystem’s own staff projections. This suggests that communication provides incremental predictive power beyond traditional macro‐economic models.
Lane also pointed out a persistent communication gap with the public: only about one in ten consumers became aware of the new inflation target in the months after its announcement, with most learning about it through television, radio or newspapers rather than directly from the ECB.
The ECB’s research shows that attention to inflation among households and firms rises when inflation is high and falls when it is low and stable. This variation matters for the transmission of policy because beliefs about future inflation shape wage‐setting, pricing and spending decisions.
Finally, the Board member explained that “communication shocks” – unexpected shifts in the tone or content of central‐bank messages – have smaller and slower macro‐economic effects than surprise interest‐rate moves, yet they remain significant enough to influence activity and inflation over time.