European Central Bank

We model how a central bank communicates its noisy forecasts (forward guidance) while taking into account its own uncertainty (confidence) and the public’s perception of the bank’s uncertainty (reputation for confidence). This creates a mismatch between the public and central bank’s interpretation of the bank announcement which induces the bank to communicate with partial transparency and deliberate imprecision. Moreover, with higher confidence (lower reputation) announcements are more precise.

How do banks manage the behavioural maturity of non-maturing deposits (NMDs)? Using a rich and confidential dataset, we investigate how banks model deposit maturities based on internal assumptions. Although NMDs are contractually floating-rate liabilities with zero maturity, banks reallocate them across different maturity buckets using models that reflect past customer behaviour. Notably, only 20% of NMDs are treated as having zero maturity, while about 10% are assigned maturities beyond seven years. We assess whether these modelling assumptions align with banks’ deposit structures.

This box summarises the findings of recent contacts between ECB staff and representatives of 71 leading non-financial companies operating in the euro area. According to these exchanges, which took place between 29 September and 9 October 2025, business conditions improved slightly in recent months, but they remained consistent with only modest growth in activity, with the manufacturing sector still weighed down by tariffs, uncertainty and challenges to competitiveness. The employment outlook also remained relatively subdued. Price growth continued to moderate.

This paper studies the effects of fiscal policy announcements on household expectations. We document announcements of price-related expansionary fiscal measures in response to the cost-of-living crisis in the four largest euro area economies and exploit the exogenous timing of fiscal actions relative to household survey participation to estimate their causal effects. Following fiscal announcements, households revise their beliefs: inflation perceptions rise, and unemployment perceptions fall.