Publication detail

Does Central Bank Communication Signal Future Monetary Policy? The Case of the ECB

Author(s): Mgr. Nicolas Fanta , Hamza Bennani, Pavel Gertler
prof. Roman Horváth Ph.D., Hamza Bennani, Pavel Gertler
Type: IES Working Papers
Year: 2019
Number: 12
Published in: IES Working Papers 12/2019
Publishing place: Prague
Keywords: Central bank communication, ECB, monetary policy
JEL codes: E52, E58
Suggested Citation: Bennani H., Fanta N., Gertler P. and Horvath R. (2019): "Does Central Bank Communication Signal Future Monetary Policy? The Case of the ECB" IES Working Papers 12/2019. IES FSV. Charles University.
Abstract: We examine the European Central Bank's ad-hoc communication and explore how it informs future monetary policy decisions. Using the rich dataset of the inter-meeting verbal communication among the members of the European Central Bank's Governing Council between 2008 and 2014, we construct a measure of communication assessing its inclination towards easing, tightening or maintaining the monetary policy stance. We find that this measure provides useful additional information about future monetary policy decisions, even when we control for market-based interest rate expectations and lagged decisions. Our results also suggest that, in particular, communication shortly before monetary policy meetings, related to unconventional measures and/or by the ECB President explain the future ECB rate changes well. Overall, these results point to the importance of transparency in understanding the future course of monetary policy.
Downloadable: wp_12_2019_bennani_fanta_gertler_horvath




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