Explaining monetary policy in press conferences

Michael Ehrmann () and Marcel Fratzscher ()

No 767, Working Paper Series from European Central Bank

Abstract: The question how best to communicate monetary policy decisions remains a highly topical issue among central banks. Focusing on the experience of the European Central Bank, this paper studies how explanations of monetary policy decisions at press conferences are perceived by financial markets. The empirical findings show that ECB press conferences provide substantial additional information to financial markets beyond that contained in the monetary policy decisions, and that the information content is closely linked to the characteristics of the decisions. Press conferences indeed have on average had larger effects on financial markets than even the corresponding policy decisions, and with lower effects on volatility. Moreover, the Q&A part of the press conference fulfils a clarification role about the economic outlook, in particular during periods of large macroeconomic uncertainty. JEL Classification: E52, E58, G14.

Keywords: Monetary policy; financial markets; real-time analysis; press conference; communication; European Central Bank. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
Date: 2007-06
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Related works:
Journal Article: Explaining Monetary Policy in Press Conferences (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:ecb:ecbwps:20070767

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