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Exploring the informativeness and drivers of tone during committee meetings: the case of the Federal Reserve

Author

Listed:
  • Hamza Bennani

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université)

  • Davide Romelli

    (Trinity College Dublin)

Abstract
This paper examines the informativeness and drivers of the tone used by FOMC members to gain insights into the decision-making process of the FOMC. We use a bag-of-words approach to measure the tone of transcripts at the speaker-meeting-round level from 1992-2009 and find persistent differences in tone among FOMC members. We also document how Presidents of regional Federal Reserve Banks use a more volatile and positive tone than the members of the Federal Reserve Bank Board of Governors. Next, we investigate whether the tone used during FOMC deliberations is associated with future monetary policy decisions and study the drivers of differences in tone among FOMC members. Our results suggest that tone is useful to predict future policy decisions and that differences in tone are mainly associated with the differences in the individual inflation projections of FOMC members.

Suggested Citation

  • Hamza Bennani & Davide Romelli, 2024. "Exploring the informativeness and drivers of tone during committee meetings: the case of the Federal Reserve," Post-Print hal-04670309, HAL.
    • Handle: RePEc:hal:journl:hal-04670309
    DOI: 10.1016/j.jimonfin.2024.103161
    Note: View the original document on HAL open archive server: https://hal.science/hal-04670309
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    References listed on IDEAS

    as
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    Keywords

    Central banks; Federal Reserve; FOMC; monetary policy committees; text analysis;
    All these keywords.

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