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Federal Reserve Communication and the COVID-19 Pandemic


  • Jonathan Benchimol

    (Bank of Israel)

  • Sophia Kazinnik

    (Federal Reserve Bank of Richmond)

  • Yossi Saadon

    (Bank of Israel)


Have the content, sentiment, and timing of the Federal Reserve (Fed) communications changed across communication types during the COVID-19 pandemic? Did similar changes occur during the global financial and dot-com crises? We compile dictionaries specific to COVID-19 and unconventional monetary policy (UMP) and utilize sentiment analysis and topic modeling to study the Fed’s communications and answer the above questions. We show that the Fed’s communications regarding the COVID-19 pandemic concern matters of financial volatility, contextual uncertainty, and financial stability, and that they emphasize health, social welfare, and UMP. We also show that the Fed’s communication policy changes drastically during the COVID-19 pandemic compared to the GFC and dot-com crisis in terms of content, sentiment, and timing. Specifically, we find that during the past two decades, a decrease in the financial stability sentiment conveyed by the Fed’s interest rate announcements and minutes precedes a decrease in the Fed’s interest rate.

Suggested Citation

  • Jonathan Benchimol & Sophia Kazinnik & Yossi Saadon, 2021. "Federal Reserve Communication and the COVID-19 Pandemic," Bank of Israel Working Papers 2021.15, Bank of Israel.
  • Handle: RePEc:boi:wpaper:2021.15

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    Cited by:

    1. Kurowski, Łukasz & Smaga, Paweł, 2023. "Analysing financial stability reports as crisis predictors with the use of text-mining," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).
    2. Fraccaroli, Nicolò & Giovannini, Alessandro & Jamet, Jean-Francois & Persson, Eric, 2022. "Does the European Central Bank speak differently when in parliament?," Working Paper Series 2705, European Central Bank.

    More about this item


    Central bank communication; Unconventional monetary policy; Financial stability; Text mining; COVID;
    All these keywords.

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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