Keywords: Monetary policy, statements, speeches, transparency
Abstract: Statements released by the Federal Open Market Committee (FOMC)
and congressional testimony by Chairman Greenspan are found to
significantly affect market interest rates, indicating that central bank
"talk" conveys important information to market participants. These
effects arise not only because the statements provide information about
the near-term policy inclinations of the FOMC but also because the
statements convey information about the outlook for the economy. By
contrast, statements raising questions about asset valuations typically
have not generated a significant response of those asset prices.
Full paper (276 KB PDF)
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Last update: November 17, 2003