A KISS for Central Bank Communication in Times of High Inflation

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 expectations 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)’.

Hoffmann, Mathias, Emanuel Moench, Lora Pavlova und Guido Schultefrankenfeld (2025), A KISS for Central Bank Communication in Times of High Inflation, ZEW Discussion Paper Nr. 25-031, Mannheim.