Dissent in Monetary Policy Decisions: Effects, Channels and Implications

Christophe Blot, Paul Hubert and Fabien Labondance

Working papers from Banque de France

Abstract: We investigate whether dissent in monetary policy committees affects asset prices. We exploit a feature of the ECB communication for identification: the revelation of dissent during press conferences is separated from policy decision announcements. Following a narrative approach, we compute a novel granular index of ECB dissent for each instrument and identify the dissent direction. Using tick data, we isolate asset price changes exactly when dissent is revealed. Dissent has a strong negative effect on stock prices, that operates specifically around status quo decisions. Dissent is a key driver of stock prices on these days, explaining one-third of their variation.

Keywords: Asset Prices; Disagreement; Monetary Policy Committee; Bad News; European Central Bank (search for similar items in EconPapers)
JEL-codes: D70 E43 E52 G14 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2025
New Economics Papers: this item is included in nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:1001

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