in ation aim is. having a target that everyone understands and believes in is ultimately a question of communication. various options for the interpretation of price stability will be considered in the review ( largarde 2019 ). 16 it has been argued that since central banks are unlikely to hit a point target on a regular basis, having one makes it harder to explain policy to the public and that a range, with or without a focal point, may be more realistic and therefore provide the central bank with more credibility ( financial times 2020 ). 17 the current situation also sets central banks an unusual challenge. for most of recent central banking history, our focus has been on communicating why we should avoid high in ation. it seems that across developed economies, central banks have won this argument, although it was painful to bring in ation expectations down in the wake of the high in ation experienced in many economies in the 1970s and 1980s. today, the task is to explain why low in ation and de ation are also something central banks want to avoid. this is a new challenge. raising in ation expectations which have fallen below target will pose different challenges than reducing in ation expectations did in the past, although it may prove equally, if not more, dif cult to achieve in light of the constraints posed by the effective lower bound ( eggertsson 2003 ). 18 now, more than ever, effective communication is needed. we have to avoid target shortfalls leading to a de - anchoring in in ation expectations from the central bank ’ s aim. however, we must bear in mind that, while the ability to gain trust and shape expectations through public statements is one of the most powerful tools the central bank has, the cost of sending the wrong message can also be high ( bernanke 2015 ). 19 designing effective monetary policy communication for the future these considerations bring us to an important question, namely how to design effective monetary policy communication? we could discuss at length various re nements to current monetary policy communications. for example, should the accounts continue to be anonymised? indeed, should we publish a voting record from governing council meetings? ( visco 2019 ). 20 should the eurosystem consider publishing an equivalent to the federal open market committee ( fomc ) dot plots? in many ways, these re nements would be aimed at smoothing communication with nancial markets and informed observers. however, what i would like to focus on here today is our communication and

s overall objectives and their consistency with the mandate, the monetary policy strategy ( or ‘ reaction function ’ ), the rationale behind the policy decisions undertaken, the assessment of the macroeconomic outlook that informed such decisions, and the expected future course of monetary policy action. communicating monetary policy in the post - crisis era following the global nancial crisis, the need for open and transparent communication in each of these different aspects of monetary policy has become even more important. in the face of the unprecedented challenges produced by the crisis, central bank remits expanded dramatically. central banks had to provide a thorough assessment of the negative shocks hitting the economy, as well as their foreseeable consequences. they had to explain their actions carefully and the expected transmission channels of new monetary policy instruments. they had to reassure a confused public of their ability and enduring commitment to tackling these challenges. central banks around the world combined interest rate reductions with new non - standard monetary policy tools. as central banks approached the effective lower bound on interest rates, it became necessary to affect the entire yield curve and not only shortterm rates. monetary policy could successfully achieve this thanks to the use of forward guidance – that is, communicating the explicit commitment to a certain path of future policy rates – complemented with large - scale asset purchase programmes. with forward guidance, therefore, communication has shifted from being the medium by which monetary policy decisions are explained to the public, to being a monetary policy instrument in itself. this makes trust, credibility, and effectiveness even more important. during the crisis and its aftermath, the use of communication as a powerful crisis management tool was seen even beyond the usual boundaries of forward guidance. in 2012, the european sovereign debt crisis was at its peak. government bond yields of more vulnerable countries of the euro were soaring, and investors doubted that national and european institutions could join forces in time to avert the collapse of the euro area. in july of that year, the then - ecb president mario draghi spoke about the economic conjuncture and the policy response, making the historic remark : “ the ecb is ready to do whatever it takes to preserve the euro. and believe me, it will be enough ” ( draghi 2012 ). 10 those words were so effective that the programme to purchase sovereign bonds of more vulnerable countries announced shortly afterward ( the outright monetary transactions, omt ) was never required. draghi ’ s earlier assurance succeeded in removing market expectations of a collapse of the euro area and redenomina