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The discrete and differential impact of monetary policy

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  • Bronwyn McCredie

Abstract

This study exploits a unique feature of the Australian monetary policy environment to determine whether economic recovery can be stimulated via central bank communications. This study finds that unexpected monetary policy announcements and communications have a significant and comparable impact on the value and volatility of the Australian foreign exchange market, suggesting that they can be used interchangeably to stimulate economic recovery. However, further analysis reveals that the state of the economy influences this impact. Specifically, during poor economic states, monetary policy actions speak louder than words, an adage that in this context provides actionable information for central bank regulators.

Suggested Citation

  • Bronwyn McCredie, 2020. "The discrete and differential impact of monetary policy," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(3), pages 2919-2937, September.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:3:p:2919-2937
    DOI: 10.1111/acfi.12421
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    References listed on IDEAS

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