ECB's Glockler and Mee: A plain-speaking central bank: contradiction in terms?

13 October 2022

Communication is a tool that helps central banks in preserving price stability. But are central banks clear enough and properly understood? On International Plain Language Day, we look at where the ECB stands in its efforts to communicate clearly and accessibly.

Inflation in the euro area is currently far too high. To fight rising prices, the ECB has increased rates decisively. But does the public understand how this will make a difference? And does the way the ECB speaks help the public in their understanding and build trust in the ECB’s actions? This is important for monetary policy because people’s expectations today about future prices can be self-fulfilling. Clearer and more accessible language can add firepower to the ECB’s actions by better influencing those expectations and building trust in the central bank. On International Plain Language Day, we look at the ECB’s efforts in recent years to become clearer and more accessible.

Simple words don’t come easy

Whatever central banks say can have a powerful impact on people’s wealth and welfare. Despite this strong effect on people’s lives, central banks – like banking supervisors and other expert institutions – struggle to speak in plain language. That is in part because their actions can be complicated to explain. But it also has to do with the audiences of central banks. According to Andy Haldane, a former Chief Economist at the Bank of England, these were until recently almost exclusively “M.E.N.” – markets, economists, and news organisations.^[1]

Focusing on such specific audiences creates problems. If a central bank relies on complex language, only an audience with many years of specialised education can understand it. Central bank jargon excludes many people, notably those who struggle with concepts like ‘monetary policy transmission’, but who would gladly discuss common sense topics like ‘price rises’. That in turn hinders the spread of ECB information and explanation, which could otherwise be incredibly helpful to citizens. Even experts can struggle to understand central bank jargon. Research suggests that more complex language used in ECB speeches limits how much media report on the central bank’s actions.^[2]

Complex language can therefore make the ECB’s task of maintaining price stability harder. It limits the extent to which the ECB can influence the inflation expectations of non-expert groups like firms and households. The latest ECB Consumer Expectations Survey finds that Europeans’ view of future inflation has been higher than expert forecasts.^[3] And recent ECB research finds that explaining its inflation target does increase people’s trust in the central bank.

For the people – as well as the markets

Central banks have expanded the frontiers of their communication in recent years.^[4] They have embraced the wider public as an audience of critical importance, which in the ECB’s case means over 340 million citizens spread across 19 – soon to be 20 – countries of the euro area.^[5] Many central banks now communicate directly with citizens via social media and have pioneered new formats and channels to better connect with the people they serve. Central banks are increasingly following the advice of recent research that more visual communication can boost people’s comprehension of central banks’ messages, while relating the central bank’s actions more closely to people’s lives can increase trust in the institution.^[6]...

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