Explaining Monetary Policy in Press Conferences

43 Pages Posted: 28 Jun 2007

See all articles by Michael Ehrmann

Michael Ehrmann

European Central Bank (ECB); Bank of Canada

Marcel Fratzscher

DIW Berlin; Centre for Economic Policy Research (CEPR)

Date Written: June 2007


The question how best to communicate monetary policy decisions remains a highly topical issue among central banks. Focusing on the experience of the European Central Bank, this paper studies how explanations of monetary policy decisions at press conferences are perceived by financial markets. The empirical findings show that ECB press conferences provide substantial additional information to financial markets beyond that contained in the monetary policy decisions, and that the information content is closely linked to the characteristics of the decisions. Press conferences indeed have on average had larger effects on financial markets than even the corresponding policy decisions, and with lower effects on volatility. Moreover, the Q&A part of the press conference fulfils a clarification role about the economic outlook, in particular during periods of large macroeconomic uncertainty.

Keywords: Monetary policy, financial markets, real-time analysis, press conference, communication, European Central Bank

JEL Classification: E52, E58, G14

Suggested Citation

Ehrmann, Michael and Fratzscher, Marcel, Explaining Monetary Policy in Press Conferences (June 2007). ECB Working Paper No. 767, Available at SSRN: https://ssrn.com/abstract=989997 or http://dx.doi.org/10.2139/ssrn.989997

Michael Ehrmann (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
+49 69 1344/7327 (Phone)
+49 69 1344/6000 (Fax)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9

Marcel Fratzscher

DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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