Have FOMC Minutes Helped Markets to Predict FED Funds Rate Changes?

36 Pages Posted: 19 Sep 2016

Multiple version iconThere are 2 versions of this paper

Date Written: September 16, 2016


This paper examines whether the release of minutes of the Federal Open Market Committee (FOMC) has provided markets with systematic clues about its future policy rates. We explain the future fed funds rate changes using Ordered Probit models (sample 1996 to 2008). We find that timely FOMC meeting minutes have provided assurance to markets about the most likely path of future interest rates. Though, their release did not cause markets to fundamentally revise their expectations on future policy decisions. The paper also discusses lessons from the Fed experience for the ECB and other central banks.

Keywords: Monetary policy, communication, FOMC minutes, predictability, ordered Probit

JEL Classification: C34, E52, E58

Suggested Citation

Jung, Alexander, Have FOMC Minutes Helped Markets to Predict FED Funds Rate Changes? (September 16, 2016). ECB Working Paper No. 1961, Available at SSRN: https://ssrn.com/abstract=2839837 or http://dx.doi.org/10.2139/ssrn.2839837

Alexander Jung (Contact Author)

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
00496913447674 (Phone)
00496913447604 (Fax)

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