EconPapers    
Economics at your fingertips  
 

Has the effect of monetary policy announcements on asset prices changed?

Michael Connolly and Taeyoung Doh

Economic Review, 2013, issue Q III, 65 pages

Abstract: The Federal Reserve increasingly has relied on forward guidance about the future path of the federal funds rate to implement monetary policy since the federal funds target rate reached its effective lower bound. The enhanced use of forward policy guidance has drawn attention to any change in its influence on the real economy. Changes in policy guidance affect the private sector?s expectations about the future path of the federal funds rate and, in turn, affect bond yields, stock prices and asset values. Changes in asset values influence real activity through their effects on spending by consumers and businesses. Doh and Connolly find a weakened response by stock prices and bond yields to the increased use of policy guidance since the recent financial crisis. Longer-term bond yields became less responsive because a prolonged period of the low interest rate reduced the variability of medium-term expectations; stock prices became less responsive because investors revised down their economic outlook in response to some announcements of a more accommodative monetary policy.

Keywords: Monetary policy; Bonds; Stock market - Prices (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
https://www.kansascityfed.org/documents/1095/2013- ... ces%20Changed%3F.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: Has the effect of monetary policy announcements on asset prices changed? (2013) Downloads
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:fedker:00009

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic Review from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-10-19
Handle: RePEc:fip:fedker:00009