Yuriy Gorodnichenko, Tho Pham, Oleksandr Talavera, 25 April 2021

While the effectiveness of central bank’s verbal communication is well documented, little is known about the effectiveness of communication via non-verbal channels. This column discusses vocal features of Federal Open Market Committee communication and examines the impacts on financial markets. The results suggest that tone of voice can contain distinct information not captured in the texts of press conferences. A positive voice tone can lead to higher share prices and decreases in volatility, highlighting the importance of voice control for central bank communication. 

Aakriti Mathur, Rajeswari Sengupta, 03 September 2020

Since the 2008 Global Crisis, significant attention is paid to central bank communication, especially for countries with an inflation targeting mandate. This column analyses the monetary policy statements of the Reserve Bank of India, which formally adopted inflation targeting in 2016. It finds that the length of statements has dramatically declined, the linguistic complexity has improved, and the content is more focused on inflation topics since the regime change. In addition, there is a strong relationship between the length of statements and stock market volatility, highlighting the real impacts of effective communication.

Maritta Paloviita, Markus Haavio, Pirkka Jalasjoki, Juha Kilponen, Ilona Vänni, 28 July 2020

The introductory statements made by the ECB are some of the most important sources of insight into the central banks’ policy goals. This column presents a textual analysis which seeks to measure the tone of the statements, with the aim of estimating the Governing Council's ‘loss function’. The results suggest that the ECB has been either more averse to inflation above the 2% ceiling, or that the de facto inflation target has been considerably below this threshold. The results also suggest that an inflation aim of 2%, combined with asymmetry, is a plausible specification of the ECB's wider preferences.

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