Central Bank Communication and House Price Expectations

Carola Binder, Pei Kuang and Li Tang

No 31232, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how US consumers’ house price expectations respond to verbal and non-verbal communication about interest rate changes using several large online surveys. Verbal communication about interest rate hikes leads to little response of average house price expectations but large heterogeneity among household groups. Communication about rate hikes combined with a simple explanation of the mortgage rate channel causes large downward revisions to house price expectations. Consumers interpret heterogeneously Chair Powell’s voice tone and body language at the press conference which significantly influence their house price expectations. More negative evaluations are associated with larger upward revisions to house price expectations.

JEL-codes: E30 E31 E52 E7 (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mon and nep-ure
Note: EFG ME
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