Boris Vujčić: Household expectations and monetary policy: The importance of high-quality surveys and evidence-based research

Vujcic at an ESMT inauguration event on household expectations research. Pure academic and communication content: how households form inflation expectations, survey methodology, the Consumer Expectations Survey, and why communication about the target beats communication about instruments. No assessment of the current policy stance, no rate signal, no comment on the inflation outlook beyond generalities.

What’s new: Nothing material for rates. The only forward-looking morsel is a passing reference to the June 2026 Eurosystem staff projections exercise underlining the need to communicate uncertainty and alternative scenarios alongside the baseline, which is a process remark, not a policy one. Everything else is a literature review honouring Michael Weber.

KEY FINDINGS

• No discussion of the current policy rate, the stance, or the near-term inflation path anywhere in the text. Zero information content for front-end pricing; do not read this as a signal from a Governing Council member.
• Household long-term inflation expectations are described as more centred on the 2% target and less sensitive to surprises than short-term expectations, though households overall are less well anchored than professionals. Reinforces the Council's standing view that anchoring is intact, which lowers the bar for tolerating short-run inflation wobbles in either direction.
• Cites Consumer Expectations Survey evidence that geopolitical risk significantly worsens euro area household sentiment and spending intentions, and that higher perceived uncertainty persistently reduces spending. A demand-weakness channel the ECB is watching; mildly dovish framing but presented as research, not as a current call.
• Notes mortgage repricing feeds into consumption with long and uneven lags across household groups and countries. Supports the argument that past tightening is still working through unevenly, relevant to any debate on how restrictive policy currently is.
• Emphasis that the June 2026 projections exercise highlighted the need to publish uncertainty and alternative scenarios, not just a baseline. Signals continued scenario-based communication from the ECB, which dilutes the informational weight of any single baseline projection for traders.

FROM THE DOCUMENT

Expectations of households are generally less well anchored than professional forecasts, but their longer-term expectations tend to be more centred around our 2% inflation target and less sensitive to surprises than the shorter-term expectations.

Evidence shows that higher perceived macroeconomic uncertainty can persistently reduce household spending.

Analysis based on the Consumer Expectations Survey shows how mortgage repricing feeds into consumption with long and uneven lags across household groups and countries.

Poetry is not a policy instrument, but the point this illustrated is important: communication sometimes needs to use alternative formats that people can better relate to.