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Dissent in Monetary Policy Decisions: Effects, Channels and Implications

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Listed:
  • Christophe Blot
  • Paul Hubert
  • Fabien Labondance

Abstract

We investigate whether dissent in monetary policy committees affects asset prices. We exploit a feature of the ECB communication for identification: the revelation of dissent during press conferences is separated from policy decision announcements. Following a narrative approach, we compute a novel granular index of ECB dissent for each instrument and identify the dissent direction. Using tick data, we isolate asset price changes exactly when dissent is revealed. Dissent has a strong negative effect on stock prices, that operates specifically around status quo decisions. Dissent is a key driver of stock prices on these days, explaining one-third of their variation.

Suggested Citation

  • Christophe Blot & Paul Hubert & Fabien Labondance, 2025. "Dissent in Monetary Policy Decisions: Effects, Channels and Implications," Working papers 1001, Banque de France.
    • Handle: RePEc:bfr:banfra:1001
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    References listed on IDEAS

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    Cited by:

    1. Paul Hubert & Rose Portier, 2025. "The Signaling Effects of Tightening and Easing Monetary Policy," Working Papers hal-05097460, HAL.

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • 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
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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