Does a Bias in FOMC Policy Directives Help Predict Intermeeting Policy Changes?

John S Lapp and Douglas Pearce

Journal of Money, Credit and Banking, 2000, vol. 32, issue 3, 435-41

Abstract: Since 1984 the FOMC has issued directives indicating a bias toward easing or tightening. This paper investigates the information content of these asymmetric directives for the likelihood of inter-meeting changes in policy during the Greenspan chairmanship. If policy is measured by the change in the average daily federal funds rate after a directive is issued, the results indicate that a bias predicts a significant change in the average funds rate. If policy is measured qualitatively by whether the target for the federal funds rate changed, a bias significantly affects the probability that the target will be changed.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:3:p:435-41

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