MNI POLICY: ECB Forecasting In Focus Ahead Of Strategy Review

Informal discussions have taken place on a potential review of the European Central Bank’s forecasting and communications, but it is too soon to say whether this would be included in an upcoming five-yearly strategy review, MNI understands.

Executive Board member Isabel Schnabel questioned whether analysts and the media placed too much emphasis on the ECB’s baseline projections in its policy calibration in a speech earlier this week, calling for a greater understanding of the bank's alternative scenarios.

The Bank of England has just received a review on its forecasts carried out by former Federal Reserve Chair Ben Bernanke, whose recommendations included a call for the BOE to publish its own rate path. But any ECB review would be an in-house affair, given the ECB’s complex organisation involving national central banks. (See MNI POLICY: Time Needed For BOE To Make Bernanke Changes)

Some senior ECB figures would also be likely to favour a gradualist approach to any reform of forecasting.

The ECB’s last strategy review began in early 2020, with its results presented in July 2021, and it has still not announced the launch date for its next iteration. (See MNI SOURCES: ECB Still Divided Over Guidance As It Nears Cuts)