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A KISS for central bank communication in times of high inflation

Author

Listed:
  • Hoffmann, Mathias
  • Mönch, Emanuel
  • Pavlova, Lora
  • Schultefrankenfeld, Guido

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 ex- pectations 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)'.

Suggested Citation

  • Hoffmann, Mathias & Mönch, Emanuel & Pavlova, Lora & Schultefrankenfeld, Guido, 2025. "A KISS for central bank communication in times of high inflation," Discussion Papers 12/2025, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:319626
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    More about this item

    Keywords

    Inflation projections; Central Bank Communication; Inflation Expectations; Randomized Control Trial; Survey Data;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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