Coordinating the Message: Media Coverage of Fed News and Market Reactions

Sylvérie Herbert, Klodiana Istrefi and Béatrice Sagna

Working papers from Banque de France

Abstract: This paper examines the homogeneity in media coverage of the Federal Reserve from 1998 to 2021 and its impact on financial markets. Using a dataset of 350,000 articles from major U.S. outlets, we document three key findings: (i) editorial specialization in Fed-related news; (ii) an increase in homogeneity of both topic and tone around significant Fed events and; (iii) a reduction in market volatility and sensitivity to monetary policy surprises when topic coverage becomes more homogeneous. Notably, this effect reverses when the dominant media focus shifts to stock market-related topics.

Keywords: Monetary Policy; Media Transmission; Central Bank Communication (search for similar items in EconPapers)
JEL-codes: C55 D83 E44 E58 G1 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:983

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