The FOMC Cycle and Consumer Decision Making: Evidence from the Residential Housing Market

60 Pages Posted: 7 May 2019 Last revised: 19 Feb 2021

See all articles by Marco Giacoletti

Marco Giacoletti

Marshall School of Business

Rodney Ramcharan

University of Southern California, Marshall School of Business

Edison G. Yu

Federal Reserve Bank of Philadelphia

Date Written: March 19, 2019

Abstract

Monetary policy works through financial markets to affect real consumer decisions. Buying a home is one of the most important consumer decisions, and we study the impact of the FOMC cycle on the timing and cost of mortgage applications. We find that the FOMC cycle is a focal point of attention for some consumers, driving an increase in the demand for mortgage credit ahead of these meetings. This bunching is more concentrated among the financially literate and when monetary policy uncertainty is high. It also leads to an increase in the cost of mortgage credit ahead of FOMC meetings.

Keywords: Monetary Policy, FOMC, Uncertainty, Housing Market, Mortgage Application

JEL Classification: E52, E58, G21

Suggested Citation

Giacoletti, Marco and Ramcharan, Rodney and Yu, Edison G., The FOMC Cycle and Consumer Decision Making: Evidence from the Residential Housing Market (March 19, 2019). USC Marshall School of Business Research Paper Sponsored by iORB, No. Forthcoming, Available at SSRN: https://ssrn.com/abstract=3364588 or http://dx.doi.org/10.2139/ssrn.3364588

Marco Giacoletti

Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Rodney Ramcharan

University of Southern California, Marshall School of Business ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

HOME PAGE: http://https://sites.google.com/site/rodneyramcharan/

Edison G. Yu (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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