The influence and policy signaling role of FOMC forecasts

Paul Hubert ()
Additional contact information
Paul Hubert: Ofce sciences-po, Postal: 69, quai d'Orsay, Paris 75007, France

No 2013-03, Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE)

Abstract: Policymakers at the Federal Open Market Committee (FOMC) publish forecasts since 1979. We examine the effects of publishing FOMC inflation forecasts in two steps using a structural VAR model. We assess whether they influence private inflation expectations and the underlying mechanism at work: do they convey policy signals for forward guidance or help interpreting current policy decisions? We provide original evidence that FOMC inflation forecasts are able to influence private ones. We also find that FOMC forecasts give information about future Fed rate movements and affect private expectations in a different way than Fed rate shocks. This body of evidence supports the use of central bank forecasts to affect inflation expectations especially while conventional policy instruments are at the zero lower bound

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: 2013-02
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 (2)

Downloads: (external link)
http://www.ofce.sciences-po.fr/pdf/dtravail/WP2013-03.pdf (application/pdf)

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 (2015)
Working Paper: The influence and policy signaling role of FOMC Forecasts (2015)
Working Paper: Central Bank Forecasts as an Instrument of Monetary Policy (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fce:doctra:1303

Access Statistics for this paper

More papers in Documents de Travail de l'OFCE from Observatoire Francais des Conjonctures Economiques (OFCE) Contact information at EDIRC.
Bibliographic data for series maintained by Francesco Saraceno ().