The Federal Reserve has become a Supra-National Central Bank with Monetary Policy Effects on foreign equity markets that exceed the host country’s domestic central bank policy. In this paper we utilize macroeconomic data to demonstrate an outsized effect on domestic equity markets by Federal...

Central bank informal communications became more frequent and acquired more mass media attention after the global financial crisis. Do investors react to the content (e.g., future expansionary or restrictive policy) of informal central bank communications? And especially, do investors have a...

This paper studies central bank communication of the ECB as a potential factor that explains the contribution to systemic risk for a panel of large banks in the Eurozone between 2002 and 2018. The empirical evidence suggests that the ECB is able to use central bank communication to effectively...

We examine how the language used by central bank officials in public press conferences influences stock returns in the euro area. In line with the concept of Odyssean Forward Guidance, we find that using constraining language to express policy commitment increases the effectiveness of Forward...

We quantify the sentiment from central bank speeches of five leading developed nations (US, UK, Japan, France, and Germany) and analyze their role in explaining the return of stock market indices for the respective nations. In this study we improve upon existing sentiment quantification...

Central banks worldwide have become more transparent. An important reason is that democratic societies expect more openness from public institutions. Policymakers also see transparency as a way to improve the predictability of monetary policy, thereby lowering interest rate volatility and...

The paper shows that there is a substantial degree of heterogeneity in forecast accuracy among Fed watchers. Based on a novel database for 268 professional forecasters since 1999, the average forecast error of FOMC decisions varies 5 to 10 basis points between the best and worst-performers...

In a new and changing environment for monetary policy, an interesting issue to examine is the use of financial market indicators by monetary policy authorities. With this in mind, the OECD canvassed a number of major central banks to get their views. This paper presents a synthesis of the...

Central banks unexpectedly tightening policy rates often observe the exchange value of their currency depreciate, rather than appreciate as predicted by standard models. We document this for Fed and ECB policy days using event studies and ask whether an information effect, where the public...

This paper documents that ECB announcements increase the stock market volatility in the euro area (EA) on the same day. I consider two volatility measures from January 1998 to May 2019. First, a realized volatility measure uses intraday data for 8 different stock market indices. Second, a range...