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Central bank talk: does it matter and why?

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  • Donald L. Kohn
  • Brian P. Sack

Abstract

Statements released by the Federal Open Market Committee (FOMC) and congressional testimony by Chairman Greenspan are found to significantly affect market interest rates, indicating that central bank \"talk\" conveys important information to market participants. These effects arise not only because the statements provide information about the near-term policy inclinations of the FOMC but also because the statements convey information about the outlook for the economy. By contrast, statements raising questions about asset valuations typically have not generated a significant response of those asset prices.

Suggested Citation

  • Donald L. Kohn & Brian P. Sack, 2003. "Central bank talk: does it matter and why?," Finance and Economics Discussion Series 2003-55, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2003-55
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    References listed on IDEAS

    as
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    Keywords

    Monetary policy; Banks and banking; Central;
    All these keywords.

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