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The Importance of Fed Chair Speeches as a Monetary Policy Tool

Author

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  • Eric T. Swanson

Abstract

I estimate the effects of Federal Open Market Committee (FOMC) announcements, post-FOMC press conferences, and speeches and Congressional testimony by the Fed chair on stock prices, Treasury yields, and interest rate futures from 1988 to 2019. I show that for all but the very shortest-maturity interest rate futures, Fed chair speeches are more important than FOMC announcements. My results suggest that the previous literature's focus on FOMC announcements has ignored the most important source of variation in US monetary policy.

Suggested Citation

  • Eric T. Swanson, 2023. "The Importance of Fed Chair Speeches as a Monetary Policy Tool," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 394-400, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:394-400
    DOI: 10.1257/pandp.20231073
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    Cited by:

    1. Kerssenfischer, Mark & Schmeling, Maik, 2024. "What moves markets?," Journal of Monetary Economics, Elsevier, vol. 145(C).
    2. Haroon Mumtaz & Jumana Saleheen & Roxane Spitznagel, 2023. "Keep it Simple: Central Bank Communication and Asset Prices," Working Papers 960, Queen Mary University of London, School of Economics and Finance.
    3. Martin Bruns & Helmut Lütkepohl & James McNeil, 2026. "Reassessing Proxy-based Identification of Multiple Monetary Policy Shocks for the Euro Area, the US , and the UK," University of East Anglia School of Economics Working Paper Series 2026-02, School of Economics, University of East Anglia, Norwich, UK..
    4. Goldstein, Nathan, 2025. "The attention of the Fed," Finance Research Letters, Elsevier, vol. 82(C).
    5. Granziera, Eleonora & Larsen, Vegard H. & Meggiorini, Greta & Melosi, Leonardo, 2025. "Speaking of Inflation: The Influence of Fed Speeches on Expectations," CEPR Discussion Papers 20038, Centre for Economic Policy Research.
    6. Granziera, Eleanora & Larsen, Wegard H. & Meggiorini, Greta & Melosi, Leonardo, 2025. "Speaking of Inflation : The Influence of Fed Speeches on Expectations," The Warwick Economics Research Paper Series (TWERPS) 1555, University of Warwick, Department of Economics.
    7. Djourelova, Milena & Ferroni, Filippo & Melosi, Leonardo & Villa, Alessandro, 2025. "One Fed, Many Voices: Coordinated Communication vs. Transparent Debate," CEPR Discussion Papers 20636, Centre for Economic Policy Research.
    8. Ahrens, Maximilian & Erdemlioglu, Deniz & McMahon, Michael & Neely, Christopher J. & Yang, Xiye, 2025. "Mind your language: Market responses to central bank speeches," Journal of Econometrics, Elsevier, vol. 249(PC).
    9. Pinar Deniz & Thanasis Stengos, 2025. "Who Is Leading in Communication Tone? Wavelet Analysis of the Fed and the ECB," JRFM, MDPI, vol. 18(4), pages 1-19, April.
    10. Ko, Eunmi, 2024. "An affine term structure model with Fed chairs’ speeches," Finance Research Letters, Elsevier, vol. 63(C).
    11. Martin T. Bohl & Niklas Humann & Pierre L. Siklos, 2026. "The Monetary Policy–Commodities Nexus: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 40(2), pages 1050-1082, April.
    12. Cho, Dooyeon & Jung, Jaehun, 2026. "Mind the tone: Responses of inflation expectations to central bankers’ speeches," Journal of International Money and Finance, Elsevier, vol. 160(C).
    13. Marc Burri & Daniel Kaufmann, 2024. "Measuring monetary policy shocks," IRENE Working Papers 24-03, IRENE Institute of Economic Research.
    14. Eric T. Swanson, 2024. "The Macroeconomic Effects of the Federal Reserve’s Conventional and Unconventional Monetary Policies," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(3), pages 1152-1184, September.
    15. Nakamura, Fumitaka & Sudo, Nao & Sugisaki, Yu, 2024. "Assessing monetary policy surprises in Japan by high frequency identification," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).
    16. Bekaert, Geert & Hoerova, Marie & Xu, Nancy, 2023. "Risk, Monetary Policy and Asset Prices in a Global World," CEPR Discussion Papers 18229, Centre for Economic Policy Research.
    17. Leonardo N. Ferreira & Caio Garzeri & Diogo Guillen & Antônio Lima & Victor Monteiro, 2025. "The Not So Quiet Revolution: signal and noise in central bank communication," Working Papers Series 635, Central Bank of Brazil, Research Department.
    18. Ko, Eunmi & Dmonte, Alphaeus & Zampieri, Marcos, 2025. "Comparison of an affine term structure model with Fed chair speeches in large language models," Finance Research Letters, Elsevier, vol. 78(C).
    19. Altavilla, Carlo & Gürkaynak, Refet & Kind, Thilo & Laeven, Luc, 2025. "Monetary Transmission with Frequent Policy Events," CEPR Discussion Papers 20196, Centre for Economic Policy Research.
    20. Ehrmann, Michael & Gnan, Phillipp & Rieder, Kilian, 2023. "Central Bank Communication by ??? The Economics of Public Policy Leaks," CEPR Discussion Papers 18152, Centre for Economic Policy Research.

    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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