Central Bank Talk: Does it Matter and Why?
38 Pages Posted: 4 Jan 2004
Date Written: August 25, 2003
Abstract
Statements released by the Federal Open Market Committee (FOMC) and congressional testimony by Chairman Greenspan are found to significantly affect market interest rates, indicating that central bank talk conveys important information to market participants. These effects arise not only because the statements provide information about the near-term policy inclinations of the FOMC but also because the statements convey information about the outlook for the economy. By contrast, statements raising questions about asset valuations typically have not generated a significant response of those asset prices.
Keywords: Monetary policy, statements, speeches, transparency
JEL Classification: E58, E52
Suggested Citation: Suggested Citation
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