ECB Speeches Move Markets as Much as Formal Policy Decisions

Central bank speeches and interviews have a significant impact on financial markets, rivaling the effect of formal monetary policy announcements. According to a recent study by the European Central Bank (ECB), speeches and interviews between Governing Council meetings can move market indices just as much as formal policy decisions.

The ECB's research team built a database of 304 formal policy announcements following Governing Council meetings and around 5,000 public communication events that took place between these meetings from January 1999 to early 2024. They found that inter-meeting communication events can help estimate the economic impact of monetary policy in the euro area.

Of the 304 formal policy announcements, around 45% produced a significant market reaction. In contrast, only a smaller share of inter-meeting communication events generated a significant market reaction, but their cumulative effect was substantial. Over 300 inter-meeting communication events moved the Euro Stoxx 50 index by 273 percentage points in cumulative terms, compared to just 98 percentage points from formal policy announcements.