Making a Statement: How Did Professional Forecasters React to the August 2011 FOMC Statement?

Richard Crump, Stefano Eusepi and Emanuel Moench

No 20130107, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The Federal Open Market Committee (FOMC) statement released on August 9, 2011, was the first to incorporate language on “forward guidance” with an explicit date tied to the Committee’s expected path of monetary policy. In this post, we exploit the timing of surveys taken before and after this statement’s release to investigate how professional forecasters changed their expectations of growth, inflation, and monetary policy. We find that the average forecast of the federal funds rate shifts considerably and closely aligns with the new language in the statement, while the average forecasts for growth and inflation change less. While there’s near unanimity among forecasters about the future path of the federal funds rate after the August 2011 FOMC statement, forecasters maintained differing views on the growth and inflation outlooks.

Keywords: Professional Forecasters; FOMC communications; policy expectations (search for similar items in EconPapers)
JEL-codes: E2 E5 (search for similar items in EconPapers)
Date: 2013-01-07
New Economics Papers: this item is included in nep-mac and nep-mon
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