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The voice of monetary policy: Evidence from the European Central Bank

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  • Ciganovic, Milos
  • Ragusa, Giuseppe
  • Sanna, Valentina

Abstract

We examine whether the vocal tone of European Central Bank press conferences affects financial markets through risk premia. Using neural networks trained on labelled speech data, we construct a voice tone index from audio recordings and estimate its dynamic effects via local projections. A more positive tone predicts a persistent decline in the implied volatility of the Euro Stoxx 50 index, higher equity valuations, and lower short-term yields. This joint response is consistent with a risk premium channel through which a confident tone compresses the price of risk rather than conveying news about the economic outlook.

Suggested Citation

  • Ciganovic, Milos & Ragusa, Giuseppe & Sanna, Valentina, 2026. "The voice of monetary policy: Evidence from the European Central Bank," Economics Letters, Elsevier, vol. 264(C).
    • Handle: RePEc:eee:ecolet:v:264:y:2026:i:c:s0165176526001709
    DOI: 10.1016/j.econlet.2026.112976
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    JEL classification:

    • 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
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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