Central Bank Talk: Does it Matter and Why?

38 Pages Posted: 4 Jan 2004

See all articles by Brian P. Sack

Brian P. Sack

Board of Governors of the Federal Reserve - Monetary and Financial Market Analysis Section

Donald L. Kohn

Board of Governors of the Federal Reserve

Date Written: August 25, 2003

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.

Keywords: Monetary policy, statements, speeches, transparency

JEL Classification: E58, E52

Suggested Citation

Sack, Brian P. and Kohn, Donald L., Central Bank Talk: Does it Matter and Why? (August 25, 2003). Available at SSRN: https://ssrn.com/abstract=483524 or http://dx.doi.org/10.2139/ssrn.483524

Brian P. Sack (Contact Author)

Board of Governors of the Federal Reserve - Monetary and Financial Market Analysis Section ( email )

20th and C Streets, NW
Washington, DC 20551
United States
202-736-5671 (Phone)
202-452-2301 (Fax)

Donald L. Kohn

Board of Governors of the Federal Reserve ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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