Central bank communication as public opinion?

The legitimacy of central banks is on the decline in many countries yet support for central banks is thought to be essential for the successful conduct of monetary policy. Embedding survey vignette experiments into three panel survey waves of German citizens, we examine how support for the European Central Bank (ECB) and the central bank’s communication style affects a respondent’s inflation expectations. Our experiments show that while information effects exist, such effects are heterogeneous across different societal groups. We find that information effects are strongest among those who already support the European project and the ECB. Our findings have important implications for the public outreach strategies of central banks. Further, in the aggregate, our results also suggest that Euroskepticism likely has inflationary effects.