The European Central Bank has published a Working Paper Series study on ECB exchange rate communication. Using nearly 100 official exchange rate statements made across 217 monetary policy press conferences from 2002 to mid-2023, the authors find that, after controlling for monetary policy shocks, such communication had limited immediate effects on the euro and any impact faded quickly, typically within a week. The paper also finds that effectiveness was particularly weak when interest rates were at the effective lower bound. It states that the views are those of the authors and do not necessarily reflect those of the ECB. The analysis finds that the ECB was more likely to mention the exchange rate when the real effective exchange rate diverged from its equilibrium value, while journalists' questions were driven more by the nominal exchange rate and by prior speeches from the ECB President. Monetary policy and central bank information shocks, rather than exchange rate remarks, were the main drivers of high frequency euro moves during press conferences, explaining about 16% of the variation in exchange rate changes. Directional effects from communication were limited overall, somewhat stronger in the early years of the sample, and mainly evident when statements conveyed a desired appreciation of the euro.
European Central Bank 2026-05-11
European Central Bank publishes working paper finding exchange rate communication has limited short lived effects on the euro
The European Central Bank published a Working Paper assessing the impact of its exchange rate communication during 217 monetary policy press conferences between 2002 and mid-2023. The authors find that, after controlling for monetary policy shocks, exchange rate statements had limited and short-lived effects on the euro, with effectiveness particularly weak at the effective lower bound, and that monetary policy and central bank information shocks, rather than exchange rate remarks, explained most high-frequency euro moves.