FOMC Forecasts as a Focal Point for Private Expectations

Paul Hubert

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Abstract: We explore empirically the theoretical prediction that public information acts as a focal point in the context of the U.S. monetary policy. We aim at establishing whether the publication of Federal Open Market Committee (FOMC) inflation forecasts affects the cross-sectional dispersion of private inflation expectations. Our main finding is that publishing FOMC inflation forecasts has a negative effect on the cross-sectional dispersion of private current-year inflation forecasts. This effect is found to be robust to another survey data set and to various macroeconomic controls. Moreover, we find that the dispersion of private inflation forecasts is not affected by the dispersion of views among FOMC members.

Keywords: Monetary policy; Central bank communication; Public information; Survey expectations (search for similar items in EconPapers)
Date: 2014-09
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Citations: View citations in EconPapers (28)

Published in Journal of Money, Credit and Banking, 2014, 46 (7), pp.1381 - 1420. ⟨10.1111/jmcb.12142⟩

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Related works:
Journal Article: FOMC Forecasts as a Focal Point for Private Expectations (2014)
Working Paper: FOMC Forecasts as a Focal Point for Private Expectations (2014)
Working Paper: FOMC forecasts as a focal point for private expectations (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03399408

DOI: 10.1111/jmcb.12142

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