Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210749 
Year of Publication: 
2019
Series/Report no.: 
Staff Report No. 897
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We use daily survey data from Gallup to assess whether households' beliefs about economic conditions are influenced by surprises in monetary policy announcements. We first provide more general evidence that public confidence in the state of the economy reacts to certain types of macroeconomic news very quickly. Next, we show that surprises about the federal funds target rate are among the news that have statistically significant and instantaneous effects on economic confidence. In contrast, surprises about forward guidance and asset purchases do not have similar effects on household beliefs, perhaps because they are less well understood. We document heterogeneity in the responsiveness of sentiment across demographics.
Subjects: 
monetary policy shocks
central bank communication
information rigidities
consumer confidence
high-frequency identification
JEL: 
E30
E40
E50
Document Type: 
Working Paper

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