Communicating Policy Options at the Zero Bound

Andreas Fischer () and Lucas Burkhart

No 6563, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines a special episode in communication practices of the Swiss National Bank (SNB) when short-term interest rates reached the zero bound. A particular feature of SNB communication policy at the time was to talk openly about alternative policy instruments despite the fact that they were never implemented. Non-sterilized FX interventions were frequently mentioned as a potential instrument. We ask how did financial markets respond to the SNB's repeated references of non-sterilized interventions? The empirical results with high frequency data provide strong evidence that SNB intervention references depreciated the domestic currency for several hours. The case study supports the view that communication is an effective tool for monetary policy.

Keywords: Central bank communication; exchange rate; Zero bound (search for similar items in EconPapers)
JEL-codes: E58 F31 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-mst
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Communicating policy options at the zero bound (2009)
Working Paper: Communicating Policy Options at the Zero Bound (2007)
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