{"content":[{"text":"256","bbox":{"left":0.128269,"top":0.055739,"width":0.034591999999999984,"height":0.018740999999999994}},{"text":"International Journal of Central Banking","bbox":{"left":0.261064,"top":0.055739,"width":0.414776,"height":0.018740999999999994}},{"text":"June 2021","bbox":{"left":0.774044,"top":0.055739,"width":0.10154700000000005,"height":0.018740999999999994}},{"text":"1.","bbox":{"left":0.128269,"top":0.109887,"width":0.022679000000000005,"height":0.02022700000000001}},{"text":"Introduction","bbox":{"left":0.180121,"top":0.109887,"width":0.160807,"height":0.02022700000000001}},{"text":"Private agents’ interpretation of monetary policy decisions and cen- \n tral bank communication is central to the formation of their beliefs \n and therefore to the transmission of monetary policy. The man- \n agement of private expectations has thus become a key feature of \n central banking (Woodford 2005). In this respect, this paper pro- \n poses to investigate the eﬀect of two diﬀerent types of central bank \n announcements, one about the policy decision and the other about \n policymakers’ assessment of the macroeconomic outlook. \n In a framework with perfect information, private agents’ and pol- \n icymakers’ expectations are aligned. So policy decisions only reveal \n monetary innovations, i.e., deviations from the systematic response \n of policy to the macroeconomic outlook. However, in a setup with \n diﬀerent information sets (i.e., the central bank and the private sec- \n tor do not share the same information set), the policy decision can \n convey information about changes in both policymakers’ preferences \n and their view of future macroeconomic developments. For example, \n an increase in the policy rate could signal to private agents that an \n inﬂationary shock will hit the economy in the future, causing higher \n inﬂation. Alternatively, the same increase in the policy rate may \n be interpreted as a simple contractionary monetary shock, which \n will lead to lower inﬂation in the future. If the ﬁrst interpretation \n is given more weight, then increasing the policy rate will lead to \n higher private inﬂation expectations, whereas if the second is given \n more weight, then increasing the policy rate will decrease private \n inﬂation expectations. The former eﬀect has been labeled the “sig- \n naling channel” of monetary policy. Romer and Romer (2000) ﬁnd \n evidence of the Federal Reserve’s decisions revealing its private infor- \n mation about the state of the economy.1 Ellingsen and S¨oderstr¨om \n (2001) establish that the private response to policy decisions may \n reﬂect a mix of the responses to the monetary innovation and to","bbox":{"left":0.128269,"top":0.146397,"width":0.747363,"height":0.600231}},{"text":"1D’Agostino and Whelan (2008), Gamber and Smith (2009), Hubert (2015a, \n 2015b), and Rossi and Sekhposyan (2016) have challenged the result that central \n banks have a forecasting advantage relative to the private sector. Recent evidence \n suggests that the advantage has vanished in the most recent period. This result, \n however, does not rule out the fact that policy decisions reveal the central bank \n information set. Both information sets could be diﬀerent and yield to similar \n forecasting performance.","bbox":{"left":0.128269,"top":0.778329,"width":0.7471850000000001,"height":0.11051199999999994}}],"images_bbox":[],"images_bbox_not_text_overlap":[]}