Christine Lagarde has said the European Central Bank must do more to explain why its forecasts are sometimes wrong and accept limitations on its ability to predict the future or risk further erosion of public trust. The ECB president warned that it would be difficult for central banks to rebuild confidence after they were forced to shred their forecasts for how inflation and growth would be affected by recent economic shocks, including the coronavirus pandemic and the invasion of large scale of Ukraine by Russia. "To rebuild trust in expert institutions, we must do a better job of conveying the uncertainty we face and the challenge inherent to forward-thinking policymaking in this environment," Lagarde said at an event in London. "Humility in the way we communicate is key to building trust." Since eurozone inflation hit a record high of 10.6 percent last year, more than five times the ECB's target, Lagarde and her fellow rate-setters have put more emphasis on past inflation figures than in their forecasts to decide monetary policy.
Central banks faced “both a challenge and an opportunity” to persuade consumers and businesses that recent high levels of inflation will not continue in the future, he said in a speech to the European Economic and Jordan Mobile Number List Financial Center on Monday. Core inflation, which excludes energy and food to give a clearer picture of building price pressures, fell to 5.3 percent in August. But that remains near its recent all-time high and the ECB has said it wants to see signs of a sustainable fall in core inflation towards its target before stopping raising interest rates. Lagarde's comments came as the ECB prepared for the most balanced monetary policy meeting in several years next week, in which policymakers expressed divergent views on whether to raise its deposit rate for the 10th consecutive time, since the current level of 3.75 percent, or pause the process.
Attempt to avoid the growing risk of recession. The president of the ECB gave few signs of which way she was leaning. But she presented two key reasons why there was an "urgent" need to "seize the moment to communicate more effectively: high inflation and high levels of attention to inflation." The growth of social media and online news had made it “increasingly difficult” for central banks to “spread factual information,” he said, pointing to research that found fake news spreads 10 to 20 times faster. than those made on the social media platform X, formerly Twitter. The ECB, like other major central banks, systematically underestimated the extent to which inflation would rise when the European economy reopened after the lifting of pandemic lockdowns and when the Russian invasion of Ukraine sent energy and food prices skyrocketing. record.