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Dissent in Monetary Policy Decisions: Effects, Channels and Implications

Author

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  • Christophe Blot

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Paul Hubert

    (Banque de France, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Fabien Labondance

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE], OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

We investigate whether dissent in monetary policy committees affect 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 hal-05158109, HAL.
    • Handle: RePEc:hal:wpaper:hal-05158109
    Note: View the original document on HAL open archive server: https://hal.science/hal-05158109v1
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    References listed on IDEAS

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    1. Eijffinger, Sylvester & Mahieu, Ronald & Raes, Louis, 2018. "Inferring hawks and doves from voting records," European Journal of Political Economy, Elsevier, vol. 51(C), pages 107-120.
    2. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 432-441, November.
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    5. Jeanneret, Alexandre, 2017. "Sovereign Default Risk and the U.S. Equity Market," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 52(1), pages 305-339, February.
    6. Daniel L. Thornton & David C. Wheelock, 2014. "Making sense of dissents: a history of FOMC dissents," Review, Federal Reserve Bank of St. Louis, vol. 96(3), pages 213-227.
    7. Jonathan Kearns & Andreas Schrimpf & Fan Dora Xia, 2023. "Explaining Monetary Spillovers: The Matrix Reloaded," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(6), pages 1535-1568, September.
    8. Scotti, Chiara, 2016. "Surprise and uncertainty indexes: Real-time aggregation of real-activity macro-surprises," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 1-19.
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    Cited by:

    1. Paul Hubert & Rose Portier, 2025. "The Signaling Effects of Tightening and Easing Monetary Policy," Working papers 999, Banque de France.

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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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