Central Bank Communication on Social Media: What, To Whom, and How?

This study answers three questions about central bank communication on Twitter: what was communicated, who were listeners, and how they reacted. Using various natural language processing techniques, we are able to identify seven main topics discussed by the Fed (monetary policy, economic growth, inflation, unemployment, financial risk, fiscal policy, and community) and six groups of the audience (economists, media, other academics, firm managers, financial sector, and the general public). While the Fed tweets talking about central banking topics attract greater attention from Twitter users, only the extensive margin is economically meaningful. Among all groups of users, the media accounts and economists are most active in engaging with the Fed, especially when discussing central banking related issues. Moreover, such media-Fed interactions are more likely to be noticed by other users. Further analysis shows that more positive Fed tweets are positively correlated with expected inflations during the low-interest-rate period.