51 Pages Posted: 3 Dec 2015 Last revised: 5 May 2017
Date Written: May 4, 2017
In an effort to increase transparency, the Chair of the Federal Reserve now holds a press conference following some, but not all, Federal Open Market Committee announcements. Press conferences are scheduled independently of economic conditions and communicate little information. Evidence from financial markets demonstrates that investors lower their expectations of important decisions on days without press conferences, and we show that they shift attention away from these announcements. Both channels prevent effective monetary policy, as the committee is averse to surprising markets and aims to coordinate market expectations. Correspondingly, we show that announcements without press conferences convey less price-relevant information.
Keywords: Federal Reserve, Press Conferences, Transparency, Uncertainty, Attention
JEL Classification: G10, G14, G18, E58
Suggested Citation: Suggested Citation
Boguth, Oliver and Gregoire, Vincent and Martineau, Charles, Shaping Expectations and Coordinating Attention: The Unintended Consequences of FOMC Press Conferences (May 4, 2017). Melbourne Business School, 2016 Financial Institutions, Regulation & Corporate Governance (FIRCG) Conference; 2016 Financial Markets and Corporate Governance. Available at SSRN: https://ssrn.com/abstract=2698477 or http://dx.doi.org/10.2139/ssrn.2698477