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The influence and policy signaling role of FOMC Forecasts

Abstract : Federal Open Market Committee (FOMC) policymakers have published macroeconomic forecasts since 1979 and we examine the effects of FOMC inflation forecasts using a structural VAR model. First, we assess whether they influence private inflation expectations. Second, we investigate the underlying mechanism at work and whether they convey policy signals. We provide original evidence that FOMC inflation forecasts influence private ones. We also find that the influencing effect of FOMC forecasts does not come through current Fed rate changes, that FOMC forecasts affect private expectations in a different way than current policy decisions, and that FOMC forecasts are informative about future Fed rate movements.
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Submitted on : Sunday, October 24, 2021 - 9:56:42 AM
Last modification on : Tuesday, January 25, 2022 - 3:18:03 PM

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Paul Hubert. The influence and policy signaling role of FOMC Forecasts. Oxford Bulletin of Economics and Statistics, Wiley, 2015, 77 (5), pp.655 - 680. ⟨10.1111/obes.12093⟩. ⟨hal-03399827⟩

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