Boris Vujčić, ECB Vice-President, emphasizes the role of high-quality surveys in understanding household expectations and their impact on monetary policy, especially during inflation shocks and geopolitical stress.
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 importance of understanding how households form expectations and why these expectations matter for monetary policy. Since monetary policy is forward-looking, insights from expectations surveys are crucial, as they influence decisions on spending, saving, investment, and borrowing.
Vujčić discussed advances in measuring expectations directly through online surveys, such as the ECB’s Consumer Expectations Survey, which provide high-quality, timely, and representative data. These surveys help track beliefs, how they are updated, and their influence on behavior, considering factors like income, wealth, and trust in institutions.
The speech emphasized that households do not form expectations like professional forecasters; their beliefs are dispersed and influenced by salient prices, gender, and information environments. Recognizing this heterogeneity is vital for macroeconomic modeling and policy analysis.
Recent expectations research has improved interpretation of economic shocks, especially during geopolitical tensions. Surveys reveal perceptions of uncertainty, which influence household spending and saving decisions, and help calibrate policy scenarios.
Survey evidence shows that macroeconomic uncertainty can reduce demand, and that household balance sheet heterogeneity affects the transmission of monetary policy. Expectations of inflation are less anchored than professional forecasts but tend to center around the 2% target over the long term.
Effective communication is essential for building trust and credibility. Clear messaging about the inflation target and policy objectives can influence expectations, especially when inflation is low or high. The messenger’s diversity and adapting communication formats, including social media, enhance outreach.
Trust depends on central bank performance, transparency, and consistency. Surveys serve as a feedback tool, helping central banks listen to the public, identify misunderstandings, and improve communication strategies.
Vujčić concluded by stressing the importance of maintaining high-quality surveys through representative sampling, harmonization, and timely data collection, while managing risks like survey fatigue and AI-related inauthentic responses. The work of Michael Weber has significantly contributed to this field.
Thank you for your attention.
