ECB Communication Signals Interest Rate Increases, Influences Economic Growth Outlook.
Central bankers in the euro area use their comments to give hints about future interest rate decisions, but these hints mostly reflect recent economic trends. Simple models based on economic variables work better than models based only on communication. In the early years of the European Union, comments from top ECB and Bundesbank officials were more useful than those from national bank presidents. Disagreements among officials were helpful when they were about economic growth. The ECB mainly used communication to signal upcoming interest rate hikes.
