“Downside risks”, “reverse interest rates” or “forward guidance”: For some citizens in the 19 member countries of the European Monetary Union, the language of the European Central Bank (ECB) seems so impenetrable and sophisticated that it could have come from another planet.
But a lot is about to change under the new central bank president Christine Lagarde, who has been in office since November. With a series of citizens’ events this year, the ECB wants to get in touch with people on the streets and learn what they think about inflation and monetary policy from the central bank, as six people familiar with the plans said. A wide variety of social groups should be included, from church representatives to students.
The American central bank, the Federal Reserve, serves as a role model, and has been listening to the pulse of the Americans for some time at so-called “Fed Listens” meetings (where the Fed is listening), where it provides important insights, for example, on the job market or Receives wage development. The starting shot in Europe is said to be given on March 26 with an event in Brussels. Each of the 19 national euro central banks should organize at least one such event by summer. The ECB declined to comment on the information.
Draghi was skeptical
The series of events is therefore part of the ongoing large-scale strategy review by the ECB, which focuses on its inflation target of below but close to two percent. This is the most important benchmark for securing monetary stability.
According to insiders, it is likely that the ECB will not communicate the results of its strategy check until the citizen consultations have been completed. “It would look pretty bad if we released substantial communication about the review in June because it would mean that we weren’t taking the feedback seriously,” said one of the people familiar with the plans.
Some central bankers, such as the Slovakian central bank head Peter Kazimir, had advocated a quick agreement on a new version of the inflation target – by the end of June. The ECB’s annual central bank forum in Sintra, Portugal, will be launched on June 29 and is recognized worldwide.
Entrepreneurs, academics, pensioners, students and priests should be invited to the public events. The ECB not only wants to hear its views on inflation, but its opinion on a whole range of topics – from climate protection to digital currencies.
The events are a further indication that the central bank wants to change its public image under its new president. Her predecessor, Mario Draghi, was still rather reserved in October about the idea that the ECB communicates directly with the general public rather than primarily with the financial world. “You have to be careful, because as soon as you change the target group, you also change your language and you promptly enter another area: the area of politics,” he warned.
The rethinking of Lagarde could also be related to the fact that the ECB has long been confronted with the fact that, according to surveys, the perception of inflation among the population sometimes deviates significantly from the officially measured inflation rate. The former French finance minister recently admitted that there was a problem with this. Households often rate inflation significantly higher.
For some currency keepers, this is due to the fact that the current consumer price index of the European statistical office Eurostat does not adequately take into account the cost of housing. Citizens’ events give the ECB the opportunity to learn more about this perception gap.
However, insiders do not expect the information obtained to lead the ECB to take a completely new direction in revising its inflation target. An important point of the events, however, was to explain the central bank’s activities in a simpler language. It is also about bringing the ECB’s views to the people, said one of the insiders. “It is an experiment with a new communication approach.”