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ECB projections as a tool for understanding policy decisions

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  • Paul Hubert

    (Ofce sciences-po)

Abstract

The European Central Bank publishes inflation projections quarterly. This paper aims at establishing whether they influence private forecasts and whether they may be considered as an enhanced means of implementing policy decisions by facilitating private agents’ information processing. We provide original evidence that ECB inflation projections do influence private inflation expectations. We also find that ECB projections give information about future ECB rate movements, and that the ECB rate has different effects if complemented or not with the publication of ECB projections. We conclude that ECB projections enable private agents to correctly interpret and predict policy decisions.

Suggested Citation

  • Paul Hubert, 2013. "ECB projections as a tool for understanding policy decisions," Documents de Travail de l'OFCE 2013-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:1304
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    Cited by:

    1. Carola Conces Binder & Rodrigo Sekkel, 2024. "Central bank forecasting: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 342-364, April.
    2. Paul Hubert, 2015. "The Influence and Policy Signalling Role of FOMC Forecasts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(5), pages 655-680, October.
    3. de Mendonça, Helder Ferreira & Vereda, Luciano & Araujo, Mateus de Azevedo, 2022. "What type of information calls the attention of forecasters? Evidence from survey data in an emerging market," Journal of International Money and Finance, Elsevier, vol. 129(C).
    4. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Anchoring of inflation expectations in the euro area: Recent evidence based on survey data," European Journal of Political Economy, Elsevier, vol. 46(C), pages 52-73.
    5. Granziera, Eleonora & Jalasjoki, Pirkka & Paloviita, Maritta, 2024. "The bias of the ECB inflation projections: A State-dependent analysis," Bank of Finland Research Discussion Papers 4/2024, Bank of Finland.
    6. Eleonora Granziera & Pirkka Jalasjoki & Maritta Paloviita, 2025. "The Bias of the ECB Inflation Projections: A State‐Dependent Analysis," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 44(3), pages 922-940, April.
    7. El-Shagi, Makram & Giesen, Sebastian & Jung, Alexander, 2012. "Does Central Bank Staff Beat Private Forecasters?," IWH Discussion Papers 5/2012, Halle Institute for Economic Research (IWH).
    8. Tomasz Łyziak & Maritta Paloviita, 2017. "Formation of inflation expectations in turbulent times. Recent evidence from the European Survey of Professional Forecasters," NBP Working Papers 261, Narodowy Bank Polski.
    9. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Formation of inflation expectations in turbulent times : Can ECB manage inflation expectations of professional forecasters?," Research Discussion Papers 13/2017, Bank of Finland.
    10. Paul Hubert, 2015. "The Influence and Policy Signalling Role of FOMC Forecasts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(5), pages 655-680, October.
    11. Pooja Kapoor & Sujata Kar, 2024. "Do Central Bank Communications Influence Survey of Professional Forecasters? An Empirical Investigation," Business Perspectives and Research, , vol. 12(1), pages 100-112, January.
    12. Ponomareva, Natalia & Sheen, Jeffrey & Wang, Ben Zhe, 2024. "Metal and energy price uncertainties and the global economy," Journal of International Money and Finance, Elsevier, vol. 143(C).
    13. Łyziak, Tomasz & Paloviita, Maritta, 2018. "On the formation of inflation expectations in turbulent times: The case of the euro area," Economic Modelling, Elsevier, vol. 72(C), pages 132-139.
    14. Vereda, Luciano & Savignon, João & Gouveia da Silva, Tarciso, 2024. "A theory-based method to evaluate the impact of central bank inflation forecasts on private inflation expectations," International Journal of Forecasting, Elsevier, vol. 40(3), pages 1069-1084.
    15. Baranowski, Paweł & Doryń, Wirginia & Łyziak, Tomasz & Stanisławska, Ewa, 2021. "Words and deeds in managing expectations: Empirical evidence from an inflation targeting economy," Economic Modelling, Elsevier, vol. 95(C), pages 49-67.
    16. Yoichi Tsuchiya, 2021. "The value added of the Bank of Japan's range forecasts," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 40(5), pages 817-833, August.
    17. Knüppel, Malte & Vladu, Andreea L., 2016. "Approximating fixed-horizon forecasts using fixed-event forecasts," Discussion Papers 28/2016, Deutsche Bundesbank.
    18. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Formation of inflation expectations in turbulent times: Can ECB manage inflation expectations of professional forecasters?," Bank of Finland Research Discussion Papers 13/2017, Bank of Finland.
    19. repec:zbw:bofrdp:2017_013 is not listed on IDEAS
    20. Sinem Kandemir & Peter Tillmann, 2023. "Not all ECB meetings are created equal," MAGKS Papers on Economics 202312, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    21. Malte Knüppel & Andreea L. Vladu, 2025. "Approximating Fixed‐Horizon Forecasts Using Fixed‐Event Forecasts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(4), pages 359-379, June.

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    More about this item

    Keywords

    Monetary policy; ECB; Private forecasts; Influence; Structural Var;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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