‘Say what?’ Trust in central bank communications

Central banks are changing how they communicate with different audiences, but judging the success of these communication efforts is difficult

The European Central Bank is “not here to close spreads”.

These words from ECB president Christine Lagarde in March 2020 caused Italian bond yields to spike and sent market volatility soaring. The spread between German and Italian sovereign bond yields widened sharply as financial markets interpreted Lagarde’s comment as a signal that the eurozone’s central bank might be less active in buying the bonds of risker eurozone government debt in its responses to the Covid-19 pandemic.

Lagarde moved

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