More than words: Fed Chairs’ communication during congressional testimonies

Alexopoulos, Michelle; Han, Xinfen; Kryvtsov, Oleksiy; Zhang, Xu

doi:10.1016/j.jmoneco.2023.09.002

Cited by 8 publications

(4 citation statements)

References 53 publications

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“…The questions and answers on the second day of testimony do not appear to generate much new information that moves interest rates. These results support the choice of Kohn and Sack (2003) to drop second-day testimonies, although Alexopoulos et al (2023) provide evidence that Fed Chair emotions may still affect stocks during the second-day of MPR testimony.…”

Section: The Sizes Of Financial Market Movementsmentioning

confidence: 66%

“…However, members of Congress can ask questions and these questions and the associated answers may differ across the days. Kohn and Sack (2003) drop the second day of testimony from their study, while Alexopoulos et al (2023) provide evidence that emotions may still affect stocks during second-day MPR testimonies. If and how the two days of testimony differ appear to be open questions, and we study those questions here.…”

Section: Background On Fed Chair Testimonymentioning

confidence: 97%

“…Further, Kohn and Sack (2003) drop second-day MPR testimony from their sample without testing if that testimony or the associated questions and answers had effects on financial markets. Alexopoulos et al (2023) study how non-verbal communication and emotions conveyed during Fed Chair testimonies affect stock prices and volatility.…”

Section: Introductionmentioning

confidence: 99%

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The Effects of the Federal Reserve Chair’s Testimony on Interest Rates and Stock Prices

Gordon,

Lunsford

2023

Working Paper (Federal Reserve Bank of Cleveland)

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We study how congressional testimony about monetary policy by the Chair of the Board of Governors of the Federal Reserve System affects interest rates and stock prices. First, we study testimony associated with the Federal Reserve’s Monetary Policy Reports (MPRs) to Congress. Testimony for a particular MPR is usually given on two days, one day for each chamber of Congress. We separately study the first day and second day of MPR testimony. We also study testimonies not associated with MPRs but that are still related to monetary policy. We find that first-day MPR testimonies cause the largest movements in interest rates and generate negative co-movement between interest rates and stock prices. Testimonies not associated with MPRs have similar but weaker effects. Second-day MPR testimonies cause the smallest movements in interest rates and generate no co-movement between interest rates and stock prices.

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Section: The Sizes Of Financial Market Movementsmentioning

confidence: 66%

Section: Background On Fed Chair Testimonymentioning

confidence: 97%

See 1 more Smart Citation

The Effects of the Federal Reserve Chair’s Testimony on Interest Rates and Stock Prices

Gordon,

Lunsford

2023

Working Paper (Federal Reserve Bank of Cleveland)

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“…find that testimony by then-Chair Alan Greenspan significantly affected interest rates. More recently, andSwanson and Jayawickrema (2023) have highlighted the importance of testimony and speeches across Fed Chairs Alexopoulos et al (2023). provide evidence that the Fed Chair's emotions during testimony can affect the stock market.6.…”

mentioning

confidence: 99%

The effects of the Federal Reserve Chair's testimony on Treasury interest rates

Gordon,

Lunsford

2024

EC (FRB Cleveland)

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Communication by the Federal Reserve is important for the conduct of monetary policy. We study how one form of Federal Reserve communication, the congressional testimony by the Chair of the Board of Governors (the Fed Chair), affects interest rates on 2-year and 10-year Treasury Notes. We study three types of Fed Chair testimony: the first day of Monetary Policy Report testimony, the second day of Monetary Policy Report testimony, and testimonies not associated with the Monetary Policy Report but that still relate to monetary policy. We find that the average size of interest rate changes is largest around first-day Monetary Policy Report testimonies and smallest around second-day Monetary Policy Report testimonies. We also document that the sizes of interest rate changes can vary over time and often correspond to the level of the federal funds rate.

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The effects of the Federal Reserve Chair’s testimony on interest rates and stock prices

Gordon,

Lunsford

2024

Economics Letters

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More than words: Fed Chairs’ communication during congressional testimonies

Cited by 8 publications

References 53 publications

The Effects of the Federal Reserve Chair’s Testimony on Interest Rates and Stock Prices

The Effects of the Federal Reserve Chair’s Testimony on Interest Rates and Stock Prices

The effects of the Federal Reserve Chair's testimony on Treasury interest rates

The effects of the Federal Reserve Chair’s testimony on interest rates and stock prices

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