Perceptions about Monetary Policy

Michael Bauer, Carolin Pflueger and Adi Sunderam
Additional contact information
Adi Sunderam: https://www.hbs.edu/faculty/Pages/profile.aspx?facId=333538

No 2023-31, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: We estimate perceptions about the Federal Reserve’s monetary policy rule from panel data on professional forecasts of interest rates and macroeconomic conditions. The perceived dependence of the federal funds rate on economic conditions varies substantially over time, including over the monetary policy cycle. Forecasters update their perceptions about the Fed’s policy rule in response to monetary policy actions, measured by high-frequency interest rate surprises, suggesting that they have imperfect information about this rule. Monetary policy perceptions matter for monetary transmission, as they affect the sensitivity of interest rates to macroeconomic news, term premia in long-term bonds, and the response of the stock market to monetary policy surprises. A simple learning model with forecaster heterogeneity and incomplete information about the policy rule motivates and explains our empirical findings.

Keywords: FOMC; monetary policy rules; survey forecasts; beliefs (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 (search for similar items in EconPapers)
Pages: 69
Date: 2023-10-25
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.frbsf.org/wp-content/uploads/wp2023-31.pdf Full Text (text/html)

Related works:
Journal Article: Perceptions About Monetary Policy* (2024)
Working Paper: Perceptions about Monetary Policy (2022)
Working Paper: Perceptions about Monetary Policy (2022)
Working Paper: Perceptions about Monetary Policy (2022)
Working Paper: Perceptions about Monetary Policy (2022)
Working Paper: Perceptions about monetary policy (2022)
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:fip:fedfwp:97242

Ordering information: This working paper can be ordered from

DOI: 10.24148/wp2023-31

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().