MNI BRIEF: No ECB Dot Plots, But Comms Can Improve - Nagel

MNI (LONDON) - There is no “compelling case” for the European Central Bank to introduce Federal Reserve-style ‘dot plots’, Bundesbank chair Joachim Nagel said in a speech Tuesday, but communication around macroeconomic uncertainty in ECB projections can be improved.

Introducing dot plots would force Governing Council members to make public their views on the future trajectory of interest rates, possibly increasing pressure on them to align with national interests, Nagel said - although he had confidence policymakers would act independently regardless. Isabel Schnabel addressed the issue in a speech earlier in 2024. (see MNI POLICY: ECB Forecasting In Focus Ahead Of Strategy Review )

Research suggests that publishing interest rate projections has not improved markets understanding of future developments, Nagel said, with more effective alternatives available. “One might be to enhance the communication of our existing measures of uncertainty. Another might be to develop new measures, such as scenario and sensitivity analyses, as well as improved fan charts. We must carefully evaluate the pros and cons of each approach.”