Explaining Monetary Policy in Press Conferences

By Michael Ehrmann, Marcel Fratzscher. Social Science Research Network, 2018

132 citations recorded by the source corpus.

The question of how best to communicate monetary policy decisions remains a highly topical issue among central banks. Focusing on the experience of the European Central Bank, this paper studies how explanations of monetary policy decisions at press conferences are perceived by financial markets. The empirical findings show that ECB press conferences provide substantial additional information to financial markets beyond that contained in the monetary policy decisions, and that the information content is closely linked to the characteristics of the decisions. Press conferences have on average had larger effects on financial markets than the corresponding policy decisions, with lower effects on volatility. Moreover, the Q&A part of the press conference fulfills a clarification role, in particular during periods of large macroeconomic uncertainty.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/3b86e458f3859b5ef44666e58989ae23fe7ea9c1

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Citations in the corpus

Measuring euro area monetary policy (2019, background): “After November 2001 only one meeting per month was a policy meeting, taking place on the first Thursday of the month, regularly accompanied by the press conferences, with some exceptions ( Ehrmann and Fratzscher 2009 discuss this policy communication structure).”
The Impact of ECB Monetary Policy Decisions and Communication on the Yield Curve (2010, unknown): “Note that these results are also in line with the findings reported in Ehrmann and Fratzscher (2009), who study market reactions to ECB press conferences.”
Interest Rate Expectations in the Media and Central Bank Communication (2013, unknown): “In line with recent studies like Lamla and Lein (2011), Conrad and Lamla (2010) as well as Ehrmann and Fratzscher (2009), we conﬁrm that the ECB’s assessment of price developments matters most.”