Let's Face It: Quantifying the Impact of Nonverbal Communication in FOMC Press Conferences

68 Pages Posted: 18 Feb 2021 Last revised: 18 Mar 2022

See all articles by Filippo Curti

Filippo Curti

Quantitative Supervision & Research - Federal Reserve Bank of Richmond

Sophia Kazinnik

Federal Reserve Banks - Quantitative Supervision & Research

Date Written: March 18, 2022

Abstract

We apply facial recognition analysis to FOMC press conference videos and quantify one of the most important aspects of nonverbal communication - facial expressions. Using minute-level data, we align our nonverbal communication measure with a set of financial assets to estimate the impact of the Fed Chairs' facial expressions on investor expectations. We find that investors adversely react to negative expressions revealed during the press conference, even when controlling for the verbal component of the press conference and additional explanatory variables. This work sets forth a new way of capturing soft information embedded in central bank communication.

Keywords: Central Bank Communication, Facial Recognition, Video, Market Expectations

JEL Classification: E52,E58,F33,G12

Suggested Citation

Curti, Filippo and Kazinnik, Sophia, Let's Face It: Quantifying the Impact of Nonverbal Communication in FOMC Press Conferences (March 18, 2022). Available at SSRN: https://ssrn.com/abstract=3782239 or http://dx.doi.org/10.2139/ssrn.3782239

Filippo Curti (Contact Author)

Quantitative Supervision & Research - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Sophia Kazinnik

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
386
Abstract Views
3,165
rank
108,556
PlumX Metrics