From press conferences to speeches: the impact of the ECB’s monetary policy communication

Prepared by Yıldız Akkaya, Lea Bitter, Adriana Grasso and Brian Amorim Cabaco

Published as part of the ECB Economic Bulletin, Issue 1/2025.

Monetary policy communication is important for managing expectations and enhancing the effectiveness of monetary policy in the pursuit of price stability. The primary means of conveying monetary policy decisions is through statements and announcements made following the Governing Council’s monetary policy meetings, which are typically held every six weeks. However, further communication between these meetings – in the form of speeches, interviews and an account of the last meeting – also plays a significant role in shaping policy expectations.

Shifts in expectations as a result of communication can be assessed by measuring the high-frequency changes in asset prices that occur around monetary policy events. Tracking the impact of communication between monetary policy meetings helps arrive at a better understanding of changes in monetary policy expectations by building a more comprehensive overview of the ECB’s policy direction and its intentions.^[1]

Looking at the ECB’s monetary policy communication across a variety of outlets offers deeper insights into their effectiveness in shaping expectations. To analyse the market impact of the ECB’s communication, the sample of monetary policy events (monetary policy press releases and press conferences) in Altavilla et al. (2019), is broadened by including communication between Governing Council meetings, such as relevant speeches related to the conduct of monetary policy given by the President of the ECB.^[2] Another source of information comes from Bloomberg news headlines referring to the ECB and monetary policy, and marked most relevant by Bloomberg users. The release of the accounts of monetary policy meetings, which document the Governing Council’s discussions during these meetings, and the Economic Bulletin, which explains the rationale behind monetary policy decisions in light of the prevailing economic and financial conditions, are also included. The sample begins in 1999 and covers events up to October 2023. The number of communication events fluctuates over time, influenced by changes in institutional conventions, such as the number of monetary policy meetings of the Governing Council per year. Notably, the number of documented communication events increased during key periods such as the global financial crisis (2008-09), the European sovereign debt crisis (2010-12), the COVID-19 pandemic (2020-21) and the subsequent inflation surges (2021-22).^[3]

The evolution of the ECB’s communication reveals a shifting relative importance of topics in response to changing economic and financial conditions and policy environments. A probabilistic topic model filters six distinct topics across different types of ECB communication. Each topic is characterised on the basis of a list of salient words that have a high probability of being associated with that particular topic, thus ensuring a clear distinction among the different topics identified by the model. This approach enables changes in topics to be tracked over time. Chart A shows significant shifts in the prevalence of topics referred to in the ECB’s communication. Early communication focused on the creation of the euro, its introduction and the ECB’s institutional framework, with the topic of “Banknotes and euro adoption” declining after the 2000s. Prior to the global financial crisis, recurring topics included price developments (“Inflation”), “Economic fundamentals” and financial markets (“Financial system”). During the late 2000s and early 2010s, the focus shifted to financial market stress, banking supervision, the financial crisis and the following sovereign debt crisis (all within the topic of “Financial system”). The “Policy instruments” topic increased in prevalence from the mid-2010s to 2021, as policy interest rates were close to the lower bound and unconventional measures had been adopted. The post-pandemic inflation surges that started in 2021 then led to a resurgence in communication with a focus on inflation. Finally, since 2020, new topics with less direct relevance to monetary policy decisions, such as climate change, the energy transition, digitalisation and gender parity (all classified in the dataset under “Other topics”), have gained in prevalence.

Chart A

Evolution of topics discussed in ECB communication

(percentage share of topic prevalence)

The impact of different ECB communication events varies significantly, with communication immediately after monetary policy meetings and communication between meetings contributing differently to market movements. Meetings of the Governing Council are associated with the largest movements in risk-free and sovereign yields, while communication between these meetings has a substantially smaller average impact (Table). Given the large number of speeches delivered by the ECB’s President, the mean absolute change per speech is smaller than that of the more infrequent statements and announcements following Governing Council meetings. However, the cumulative effect of frequent communication between monetary policy meetings reaches a level comparable to the market impact of the Governing Council’s meetings over the sample period. Speeches given by the ECB’s President, in particular, lead to significant cumulative yield movements that are similar in scale to those arising from monetary policy press releases and press conferences combined. In contrast, the accounts of monetary policy meetings and Bloomberg headlines have a much smaller cumulative impact on yields.

Consistent with the literature, the distribution of yield impacts triggered by monetary policy press releases and press conferences exhibits “fat tails”.^[4] Yield responses to monetary policy announcements are generally small, but significant announcements lead to substantial asset price reactions, resulting in a fat-tailed distribution. This can be seen from panel a) in Chart B, where the width at each point of the “violin” plot reflects the density of the data. Most values are concentrated around zero and the thin tails indicate occasional, larger responses. The “fat tails” are an even more pronounced feature in the distributions of the impact of communication between meetings, owing to the more muted market reaction in general and fewer significant events, despite some important events occurring between meetings that have a very high market impact in the tails of the distribution.^[5]

Chart B

Distribution of high-frequency movements across event types for two-year OIS rates

(x-axis: density; y-axis: basis points)

Communication both accompanying Governing Council meetings and in the period between meetings is essential for effectively conveying and shaping the ECB’s monetary policy. Communication plays a crucial role in shaping monetary policy outcomes. While press conferences following Governing Council meetings serve as the primary channel for announcing policy decisions, communication between Governing Council meetings is also important for tracking the evolution of policy discussions. Although the impact of communication between meetings tends to be smaller than that of press conferences, its frequency amounts to a significant cumulative effect over time. Communication between meetings not only explains policy decisions and ensures accountability and transparency but also shapes policy expectations.