ECB's evolving communication and policy preferences since 2021 strategy review

Markus Haavio, Joni Heikkinen, Pirkka Jalasjoki, Juha Kilponen and Maritta Paloviita

No 3/2025, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: We study the evolution of the European Central Bank's (ECB) monetary policy since July 2021, following the adoption of a new strategy and amid a period of volatile inflation. Utilizing text analysis, we assess changes in the general sentiment of the ECB's communication. Additionally, we employ topic modeling to develop an inflation focused tone index. By integrating these tone indices with real-time data from monetary policy meetings, we directly estimate the ECB's loss function. Our findings indicate a recent shift towards a more inflation-centered communication approach by the ECB. Preliminary results also suggest that the ECB's policy preferences have become more symmetric since July 2021.

Keywords: asymmetric loss function; central bank communication; textual analysis; topic model; optimal monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/313643/1/1919895787.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:313643

Access Statistics for this paper

More papers in Bank of Finland Research Discussion Papers from Bank of Finland Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().