Philip R. Lane: The science and practice of monetary policy communication: the ECB experience

Philip R. Lane, a member of the European Central Bank's Executive Board, delivered a speech on the science and practice of monetary policy communication, drawing on the ECB's own experience. The headline itself contains no specific policy decision, rate change, or numerical forecast, so the content is best read as a framework discussion about how the central bank shapes market expectations through forward guidance, statements, and press conferences. The transmission channel here is expectations management: because short-term rate paths are priced through overnight index swaps and the euro yield curve, the credibility and clarity of ECB communication directly influence term premia, front-end rate expectations, and the euro's relative value against other major currencies. Assets most sensitive to this framing include euro area sovereign bonds, particularly the two-year and ten-year segments, euro overnight index swaps, and EUR crosses such as EUR/USD, where shifts in perceived policy guidance feed through quickly. The next concrete catalyst for traders is the ECB's scheduled monetary policy meeting and accompanying press conference, where any signals on the reaction function will be

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