Economics, Econometrics and Finance
8 years ago

FOMC Communication Key in Predicting Federal Funds Rate Changes.

Does FOMC Communication Help Predicting Federal Funds Target Rate Changes
Bernd Hayo, Matthias Neuenkirch

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The study looked at how the Federal Open Market Committee (FOMC) communication can help predict changes in the federal funds target rate. By analyzing speeches and reports from FOMC members between 1998 and 2006, the researchers found that communication indicators significantly explain rate changes. Speeches by Board of Governors members and regional presidents had the most impact, while other types of communication had less influence. The study also showed that FOMC speeches were better at predicting rate changes than newswire reports.