Deciphering Fedspeak: The Information Content of FOMC Meetings

43 Pages Posted: 25 Mar 2017  

Narasimhan Jegadeesh

Emory University - Department of Finance

Di (Andrew) Wu

University of Michigan, Stephen M. Ross School of Business

Date Written: March 23, 2017

Abstract

We present a new approach to quantify the economic and policy content of the Federal Reserve communications by dissecting the Federal Open Market Committee (FOMC) meeting minutes into eight distinct economic topics. We examine the informativeness of the Fed's discussion of each of these topics for the stock market and for interest rates. The market finds the Fed's discussion of its policy stance, inflation and employment to be the most informative and its discussion of topics such as trade, consumption and investment are not informative.

JEL Classification: G18, G28, E58

Suggested Citation

Jegadeesh, Narasimhan and Wu, Di, Deciphering Fedspeak: The Information Content of FOMC Meetings (March 23, 2017). Available at SSRN: https://ssrn.com/abstract=2939937 or http://dx.doi.org/10.2139/ssrn.2939937

Narasimhan Jegadeesh

Emory University - Department of Finance ( email )

Atlanta, GA 30322-2710
United States

Di Wu (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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