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Financial literacy quickens monetary policy reaction – study

Improving people’s knowledge of money matters could strengthen transmission

Knowledge gap

Consumers with higher levels of financial literacy react more quickly to changes in monetary policy, according to a post on the European Central Bank (ECB) blog.

The authors – Evangelos Charalambakis, Omiros Kouvavas and Pedro Neves – say people’s predictions of monetary policy and their decisions on whether to borrow or save changed during the inflationary wave of 2022. However, people with higher levels of financial literacy were quicker to adjust.

“The way monetary tightening affects consumers’

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