A Matter of Minutes: Unexpected FOMC Communication and Fed Credibility

Venade João and Grilo Filipe ()
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Venade João: School of Economics and Management, 26706 University of Porto , Porto, Portugal
Grilo Filipe: Porto Business School, 26706 CEF.UP, CEAD, University of Porto , Matosinhos, Portugal

The B.E. Journal of Macroeconomics, 2025, vol. 25, issue 1, 1-43

Abstract: Unexpected revelations in the Federal Open Market Committee (FOMC) meeting minutes may provide critical information and hinder the Federal Reserve’s (Fed) credibility. Our analysis explores the impact of unanticipated content on FOMC policy discussions, revealing that more-hawkish-than-expected minutes reduce daily stock market returns by raising the risk premium. We also find a non-linear relationship between the unexpected minutes’ sentiment and the Fed’s credibility: surprise hawkish revelations can worsen credibility, with larger deviations further de-anchoring long-term inflation expectations from the 2 % target. Our findings suggest that the Fed should continue refining its communication strategies to avoid the damage of unexpectedly hawkish minutes in its credibility.

Keywords: FOMC; meeting minutes; central bank communication; sentiment analysis; central bank credibility (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 G14 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejm-2024-0074

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