On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates

Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of St. Louis
Review
Gauging Market Responses to Monetary Policy Communication
Kevin L. Kliesen
Brian Levine
Christopher J. Waller
Abstract

The modern model of central bank communication suggests that central bankers prefer to err on the side of saying too much rather than too little. The reason is that most central bankers believe that clear and concise communication of monetary policy helps achieve their goals. For the Federal Reserve, this means to achieve its goals of price stability, maximum employment, and stable long-term interest rates. This article examines the various dimensions of Fed communication with the public and financial markets and how Fed communication with the public has evolved over time. We use daily and intraday data to document how Fed communication affects key financial market variables. We find that Fed communication is associated with changes in prices of financial market instruments such as Treasury securities and equity prices. However, this effect varies by type of communication, by type of instrument, and by who is doing the speaking.


Download Article Full text
Download Issue Full text
Cite this item
Kevin L. Kliesen & Brian Levine & Christopher J. Waller, "Gauging Market Responses to Monetary Policy Communication" , Federal Reserve Bank of St. Louis, Review, volume 101, issue 2, pages 69-91, 2019.
More from this series
JEL Classification:
Subject headings:
DOI: 10.20955/r.101.69-91
For corrections, contact Anna Oates ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal