One Fed, Many Voices: Coordinated Communication vs. Transparent Debate

Milena Djourelova, Filippo Ferroni, Leonardo Melosi and Alessandro Villa
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Alessandro Villa: https://www.chicagofed.org/people/v/villa-alessandro

No WP 2025-23, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: We analyze 481 speeches by FOMC members since 2007, excluding official press conferences. Combining high-frequency financial data with text analysis, we identify monetary policy surprises and measure each speech’s similarity to the Chair’s press conference preceding it. On average, monetary surprises around these speeches have no significant effect on inflation expectations or stock prices. Yet, speeches closely aligned with the Chair’s press conference amplify policy transmission, while less coordinated remarks dilute earlier effects on yields, inflation expectations, and equities. A general equilibrium model with incomplete information rationalizes these findings.

Keywords: monetary policy communication; FOMC; Text Analysis; Central bank; Market expectations (search for similar items in EconPapers)
JEL-codes: C55 D83 E52 E58 G14 (search for similar items in EconPapers)
Pages: 40
Date: 2025-11-20
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:102273

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DOI: 10.21033/wp-2025-23

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