Edition November 13, 2026

The science and practice of monetary policy communication – the European Central Bank experience

Central bank communication can shape financial-market prices across maturities and risk levels by influencing market participants’ expectations, with knock-on effects for financing conditions and decisions about credit, saving and investment.

Household and business decisions can be influenced by their views of monetary policy, which are shaped by how the central bank communicates. Earlier research assessed the content and tone of monetary policy statements and speeches by classifying words and phrases linked to tighter or looser policy, or to views on inflation and the economic outlook. Machine-learning methods and large language models make it possible to analyse extensive text collections more automatically, taking context into account instead of relying only on the frequency of individual words or predefined phrases.

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