The Voice of Monetary Policy

Yuriy Gorodnichenko, Tho Pham and Oleksandr Talavera ()

American Economic Review, 2023, vol. 113, issue 2, 548-84

Abstract: We develop a deep learning model to detect emotions embedded in press conferences after the Federal Open Market Committee meetings and examine the influence of the detected emotions on financial markets. We find that, after controlling for the Federal Reserve's actions and the sentiment in policy texts, a positive tone in the voices of Federal Reserve chairs leads to significant increases in share prices. Other financial variables also respond to vocal cues from the chairs. Hence, how policy messages are communicated can move the financial market. Our results provide implications for improving the effectiveness of central bank communications.

JEL-codes: D83 E31 E44 E52 E58 F31 G14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (21)

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Related works:
Working Paper: The Voice of Monetary Policy (2021)
Working Paper: The Voice of Monetary Policy (2021)
Working Paper: The Voice of Monetary Policy (2021)
Working Paper: The Voice of Monetary Policy (2021)
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DOI: 10.1257/aer.20220129

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