Arbeitspapier
Purdah: on the rationale for central bank silence around policy meetings
Despite substantial differences in monetary policy and communication strategies, many central banks share the practice of purdah, a self-imposed guideline of abstaining from communication around policy meetings or other important events. This practice is remarkable, as it seems to contradict the virtue of transparency by requiring central banks to withhold information precisely when it is sought after intensely. However, imposing such a limit to communication has often been justified on grounds that such communication may create excessive market volatility and unnecessary speculation. This short paper assesses the purdah for the Federal Reserve. The empirical results confirm the conjecture that financial markets are substantially more sensitive to central bank communication around policy meetings. Short-term interest rates react three to four times more strongly to statements in the purdah before FOMC meetings than during other times, and market volatility increases (compared to a volatility reduction induced by statements otherwise). The findings thus offer relevant insights about the limits to central bank transparency.
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 868
- Klassifikation
-
Wirtschaft
Central Banks and Their Policies
Monetary Policy
Interest Rates: Determination, Term Structure, and Effects
- Thema
-
communication
effectiveness
Federal Reserve
Interest Rates
monetary policy
purdah
transparency
Vorstand
Geheimhaltung
Öffentlichkeitsarbeit
Geldpolitik
Zinspolitik
Informationseffizienz
USA
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Ehrmann, Michael
Fratzscher, Marcel
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2008
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Ehrmann, Michael
- Fratzscher, Marcel
- European Central Bank (ECB)
Entstanden
- 2008
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