Household expectations shape monetary transmission, Vujčić says
Direct measurement of household expectations is essential to understand monetary policy transmission, ECB Vice-President Boris Vujčić stated at ESMT Berlin on September 1, 2026. He noted that conventional rational expectation models fail to capture diverse consumer decisions.
Direct measurement over macro models
Standard macroeconomic indicators such as inflation, wages, consumption and credit conditions do not capture what households believe, Boris Vujčić emphasized.
Subjective beliefs regarding future inflation, employment, income and borrowing costs determine immediate decisions on saving, spending and wage negotiations.
Vujčić noted that expectations surveys provide granular evidence on why identical shocks generate different reactions across demographics and jurisdictions.
Decades of research relied on strict rational expectation assumptions, but empirical work over the past twenty years proves the necessity of measuring expectations directly rather than inferring them from aggregate outcomes.
Bridging academia and central banking
The remarks were delivered at the inauguration of the Alexander von Humboldt Professorship awarded to Professor Michael Weber at ESMT Berlin.
Weber's academic research pioneered methods for measuring subjective consumer expectations directly.
Central banks increasingly incorporate these micro-level survey techniques to evaluate how communication reaches the public.
Understanding behavioral heterogeneity across households has transformed modern monetary policy analysis over the past two decades.
Theory finally meets reality
Central banks took far too long to abandon the fiction of perfectly rational consumers.
Direct household surveys expose deep behavioral splits that aggregate models consistently overlook.
Policymakers must now prove that these empirical insights translate into more effective communication and policy.