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The (Not So) Quiet Period: Communication by ECB Decision-makers during Monetary Policy Blackout Days

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  • Gnan, Phillipp
  • Rieder, Kilian

Abstract

We use confidential data to provide an empirical primer on the European Central Bank's (ECB) monetary policy quiet period between 2008 and 2021. Breaches of blackout rules happen regularly and their frequency is heterogeneous across ECB Governing Council members. We document that quiet period breaches trigger high-frequency market reactions that are up to twice as large as the median market reaction to speeches in inter-meeting periods. Controlling for member and time fixed effects, we find that breaches respond to absolute inflation deviations of policy-makers’ constituencies from the ECB's target and to interest rate spreads inside the euro area. We also exploit plausibly exogenous variation in the ECB's rotational voting schedule to show that non-voting members do not engage in strategic communication during the quiet period to lock in their voting peers.

Suggested Citation

  • Gnan, Phillipp & Rieder, Kilian, 2022. "The (Not So) Quiet Period: Communication by ECB Decision-makers during Monetary Policy Blackout Days," CEPR Discussion Papers 15735, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15735
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    Cited by:

    1. Ehrmann, Michael & Tietz, Robin & Visser, Bauke, 2021. "Voting right rotation, behavior of committee members and financial market reactions: evidence from the U.S. Federal Open Market Committee," Working Paper Series 2569, European Central Bank.
    2. Ehrmann, Michael & Wabitsch, Alena, 2022. "Central bank communication with non-experts – A road to nowhere?," Journal of Monetary Economics, Elsevier, vol. 127(C), pages 69-85.
    3. Michael Ehrmann & Paul Hubert, 2022. "Information Acquisition ahead of Monetary Policy Announcements," Working papers 897, Banque de France.
    4. Rieder, Kilian, 2022. "Monetary policy decision-making by committee: Why, when and how it can work," European Journal of Political Economy, Elsevier, vol. 72(C).
    5. Jan C. van Ours, 2022. "How Retirement Affects Mental Health, Cognitive Skills and Mortality; an Overview of Recent Empirical Evidence," Tinbergen Institute Discussion Papers 22-050/V, Tinbergen Institute.

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    More about this item

    Keywords

    Monetary policy; Quiet period; Rotational voting; Decision-making; Central bank communication; European central bank; Home bias;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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