The Importance of the Wording of the ECB

Carlo Rosa and Giovanni Verga

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper analyses the ECB communication, focusing in particular on its transparency dimension. We posit that if the ECB is transparent about its future policy decisions, then we should be able to forecast fairly well its future interest rate setting behaviour. We find that the predicting ability of the European monetary authority's words, is similar to the one implied by market-based measures of monetary policy expectations. Moreover, the ECB's wording provides complementary, rather than substitute, information with respect to economic and monetary variables.

Keywords: ECB communication; transparency; monetary policy forecast; empirical reaction function; Euribor rate curve (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 G14 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-cba, nep-eec, nep-fin and nep-mac
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: The importance of the wording of the ECB (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0694

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