Dissent in Monetary Policy Decisions: Effects, Channels and Implications

Christophe Blot (), Paul Hubert and Fabien Labondance
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Christophe Blot: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Paul Hubert: Banque de France, Sciences Po - Sciences Po
Fabien Labondance: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

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Abstract: We investigate whether dissent in monetary policy committees affect asset prices. We exploit a feature of the ECB communication for identification: the revelation of dissent during press conferences is separated from policy decision announcements. Following a narrative approach, we compute a novel granular index of ECB dissent for each instrument and identify the dissent direction. Using tick data, we isolate asset price changes exactly when dissent is revealed. Dissent has a strong negative effect on stock prices, that operates specifically around status quo decisions. Dissent is a key driver of stock prices on these days, explaining one-third of their variation.

Keywords: Asset prices; Monetary Policy Committee; European Central Bank; Disagreement; Bad news. (search for similar items in EconPapers)
Date: 2025
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