Fed Communication on Financial Stability Concerns and Monetary Policy Decisions: Revelations from Speeches

Klodiana Istrefi, Odendahl Florens and Giulia Sestieri

Working papers from Banque de France

Abstract: This paper studies the informational content of publicly given speeches of FOMC members with a focus on financial stability, from 1997 to 2018. We document that presidents of Federal Reserve Banks spoke more than Board members around and after the financial crisis, and exhibit more variation in the topics of their speeches. Our speech-based indicators of financial stability-related topics show that, when added to a standard forward-looking Taylor rule, a higher speech intensity on these topics relates to a more accommodative monetary policy. This result is driven by the information in speeches of Fed presidents, not the Board or the Fed Chair. We discuss several channels that can rationalize this finding.

Keywords: Monetary Policy; Federal Reserve; Financial Stability; Communication. (search for similar items in EconPapers)
JEL-codes: E03 E50 E61 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Fed communication on financial stability concerns and monetary policy decisions: Revelations from speeches (2023)
Working Paper: Fed Communication on Financial Stability Concerns and Monetary Policy Decisions: Revelations from Speeches (2022)
Working Paper: Fed communication on financial stability concerns and monetary policy decisions: revelations from speeches (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:779

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