Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153201
Authors: 
Ehrmann, Michael
Fratzscher, Marcel
Year of Publication: 
2007
Series/Report no.: 
ECB Working Paper 767
Abstract: 
The question 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 indeed have on average had larger effects on financial markets than even the corresponding policy decisions, and with lower effects on volatility. Moreover, the Q&A part of the press conference fulfils a clarification role about the economic outlook, in particular during periods of large macroeconomic uncertainty.
Subjects: 
communication
European Central Bank
financial markets
monetary policy
press conference
real-time analysis
JEL: 
E52
E58
G14
Document Type: 
Working Paper

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