Template-Type: ReDIF-Paper 1.0
Author-Name: Fiorella De Fiore
Author-X-Name-First: Fiorella
Author-X-Name-Last: De Fiore
Author-Name: Marco Jacopo Lombardi
Author-X-Name-First: Marco Jacopo
Author-X-Name-Last: Lombardi
Author-Name: Johannes Schuffels
Author-X-Name-First: Johannes
Author-X-Name-Last: Schuffels
Title: Are households indifferent to monetary policy announcements?
Abstract: We study the impact of the Fed's monetary policy announcements on households' expectations by comparing responses to the Survey of Consumer Expectations before and after Federal Open Market Committee (FOMC) meetings, over the period 2013-2019. We find that Fed decisions affect expectations of interest rates on savings accounts, particularly for respondents with high financial and numerical literacy. The impact of monetary policy announcements on inflation expectations is muted, even in response to some of the most relevant meetings of the FOMC that took place during that period. Expectations of personal financial conditions are barely affected. Our results stand in contrast to experimental studies that find strong effects of monetary policy and other macroeconomic news on expectations of households receiving a specific treatment, suggesting that the news naturally reaching the general population may provide weaker signals.
Length: 39 pages
Creation-Date: 2021-08
File-URL: https://www.bis.org/publ/work956.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work956.htm
File-Format: text/html
Number: 956
Keywords: households, monetary policy, central bank communication, inflation expectations, survey data
Classification-JEL: E30, E40, E50, E70
Handle: RePEc:bis:biswps:956