Household expectations and monetary policy: the role of high-quality surveys

Boris Vujčić, Vice-President of the European Central Bank (ECB), delivered a speech at the inauguration of the Alexander von Humboldt Professorship awarded to Professor Michael Weber at the European School of Management and Technology (ESMT) Berlin.

He highlighted the significance of understanding household expectations for effective monetary policy. Expectations influence decisions on spending, saving, investment, and borrowing, affecting the transmission mechanism of monetary policy.

Vujčić noted that expectations are often dispersed due to differences in income, wealth, financial literacy, and trust in institutions. Advances in survey technology, such as the ECB’s Consumer Expectations Survey, enable high-quality, timely, and representative data collection, improving understanding of expectations formation.

The speech discussed how expectations surveys inform policy analysis, especially during inflation shocks and geopolitical stress. They help interpret economic shocks, assess uncertainty, and understand heterogeneity in household responses based on factors like housing tenure and financial literacy.

Vujčić emphasized the role of communication in building trust and credibility. Clear, accessible messaging about the inflation target and policy objectives can influence expectations positively. The speech also highlighted the importance of diverse messengers and adapting communication to changing media environments.

Finally, he stressed the importance of maintaining high data quality in surveys, managing risks such as survey fatigue and AI-related responses. Accurate data collection is essential for effective policymaking and credible communication.

More information is available on the official ECB website.