The communication policy of the European Central Bank: An overview of the first decade

Since its inception, the European Central Bank (ECB) has regarded communication as anintegral part of its monetary policy. This paper describes and evaluates ECB communications during the first decade of its operation.We conclude that, overall, ECB communication has contributed to the effectiveness of its monetary policy. Our review of the literature shows that ECB communications affect the level and volatility of financial prices - suggesting that private sector expectations reacted to ECB communication. In addition, there is evidence that communication has improved the predictability of interest rate decisions.