Messaging to a public with its own view on central bank confidence

We model central bank communication when there is disagreement between the markets and the central bank about the central bank’s confidence surrounding its point forecast. We show that such a disagreement leads the markets to misunderstand a given announcement, so that the markets either over- or underreact to the bank’s announcement. Communicating only a part of the central bank’s information set is a way to correct the markets’ over- or underreaction.

With talk of closer EU alignment, the UK is signalling to Europe that it’s a partner worthy of trust

PM Keir Starmer and European Commission President Ursula von der Leyen have reset the UK-EU relationship – but UK alignment would take things a step further. Alexandros Michailidis/ShutterstockIt is now almost a decade since the UK voted for Brexit and since the tariffs of US president Donald Trump’s first term increased global trade frictions.

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