ECB President Christine Lagarde on Communicating Monetary Policy
The president of the European Central Bank, Christine Lagarde, spoke at a conference in London this week, addressing policy makers and the public. The focus was on inflation and the broader weather of global tensions, including geopolitical shifts that influence public expectations about prices and money. Lagarde underscored that the central bank’s words shape how people think about the economy and future costs of living.
Lagarde highlighted the media environment as a key factor in how information reaches households. She pointed to obstacles that hinder the transmission of accurate data, such as the rise of new technologies and the spread of misinformation. She cited studies showing that false claims can travel far faster than verified information on social networks, stressing the need for reliable communication in these platforms.
Among the main challenges she identified were the constant race for attention and a global decline in trust in institutions. In this context, she stressed that inflation remains high and that the ECB is resolutely aiming to bring price growth back to the 2 percent target over the medium term. Lagarde warned that inflation dynamics can become self-fulfilling if expectations stay anchored, and she noted that households are increasingly paying close attention to inflation data.
She asserted that it is crucial for the ECB to forward its monetary policy messages clearly to the public. Clear communication supports the legitimacy of independent central banks and reinforces the effectiveness of monetary policy in democratic societies. Lagarde reassured audiences that clarity is essential, especially in a world marked by volatile prices and instability.
Language for Public Understanding
Lagarde observed that when inflation is low, only experts and financial markets show sustained interest in central bank communication. In such times, technical language can become a comfort zone for specialists. As circumstances evolve, the ECB adapts its language to be more inclusive, a move she described as democratizing its communication through humility. One example is the EU reports, which are issued in all official languages to increase accessibility.
She emphasized the goal of transparent communication rather than risking public distrust through ambiguous forecasts. Any mistakes made in forecasting are acknowledged openly, with explanations of their impact on everyday life. The ECB aims to explain how inflation affects daily expenses, why it must be restrained, and how policy measures help enhance credibility in the eyes of the public. The target of around 10 percent was mentioned as a reference point in some discussions.
Lagarde also believes that this approach to communication strengthens the ECB’s presence across traditional media and social networks, helping the public understand policy decisions more clearly and directly.