Central Bank Forecasts as an Instrument of Monetary Policy

Paul Hubert

No 2011-23, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: Policymakers at the Federal Open Market Committee (FOMC) publish macroeconomic forecasts since 1979. Some studies find that these forecasts do not contain useful information to predict these macroeconomic variables compared to other forecasts. In this paper, we examine the value of publishing these FOMC forecasts in two steps. We assess whether they influence private forecasts and whether they may be considered as a policy instrument. We provide original evidence that FOMC forecasts are able to influence private expectations. We also find that FOMC forecasts give information about future Fed rate movements, affect policy variables in a different way from the Fed rate, and respond differently to macro shocks.

Keywords: Monetary Policy; Forecasts; FOMC; Influence; Policy signals; Structural VAR. (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Influence and Policy Signalling Role of FOMC Forecasts (2015)
Working Paper: The influence and policy signaling role of FOMC forecasts (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fce:doctra:1123

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