ECB Speeches Move Markets as Much as Formal Policy Announcements

A study by economists Klodiana Istrefi, Florens Odendahl, and Giulia Sestrieri has found that European Central Bank (ECB) speeches and interviews can move markets as much as formal monetary policy announcements. The research, published on September 24th, examined 304 formal policy decisions and approximately 5,000 public events between January 1999 and early 2024.

The study found that around 45% of formal policy announcements produced a significant market reaction, while inter-meeting communication events had a more diverse impact. However, due to their frequency, the cumulative effect of these interventions was comparable to that of formal policy announcements.

According to the authors, ECB presidents have the largest impact on average in speeches and interviews, followed by national central bank governors and then ECB board members.

The study's findings highlight the importance of considering the role of individual policymakers in shaping market expectations about monetary policy direction, which in turn affects inflation and unemployment across the euro area.