Let's Face It: Quantifying the Impact of Nonverbal Communication in FOMC Press Conferences

45 Pages Posted: 18 Feb 2021 Last revised: 25 Apr 2023

See all articles by Filippo Curti

Filippo Curti

Federal Reserve Bank of Richmond - Quantitative Supervision & Research

Sophia Kazinnik

Federal Reserve Banks - Quantitative Supervision & Research

Date Written: March 18, 2022

Abstract

We apply facial recognition analysis to FOMC press conference videos and quantify one of the most important aspects of nonverbal communication - facial expressions. Using minute-level data, we align our nonverbal communication measure with a set of financial assets to estimate the impact of the Fed Chairs' facial expressions on investor expectations. We find that investors adversely react to negative expressions revealed during the press conference, even when controlling for the verbal component of the press conference and additional explanatory variables. This work sets forth a new way of capturing soft information embedded in central bank communication.

Keywords: Central Bank Communication, Facial Recognition, Video, Market Expectations

JEL Classification: E52,E58,F33,G12

Suggested Citation

Curti, Filippo and Kazinnik, Sophia, Let's Face It: Quantifying the Impact of Nonverbal Communication in FOMC Press Conferences (March 18, 2022). Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2022, Available at SSRN: https://ssrn.com/abstract=3782239 or http://dx.doi.org/10.2139/ssrn.3782239

Filippo Curti (Contact Author)

Federal Reserve Bank of Richmond - Quantitative Supervision & Research ( email )

530 E Trade St
Charlotte, NC 28202
United States

Sophia Kazinnik

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
906
Abstract Views
5,797
Rank
48,240
PlumX Metrics