ECB Speeches Move Markets As Much As Policy Announcements

A study by the European Central Bank (ECB) has found that speeches and interviews by its policymakers can move markets as much as formal monetary policy announcements. The research, conducted by economists Klodiana Istrefi, Florens Odendahl, and Giulia Sestrieri, 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. However, the results from inter-meeting communication events were more diverse, with a smaller share generating a significant market reaction. This is not surprising, as formal policy announcements are inherently focused on monetary policy decisions, while inter-meeting communication events cover a broader range of topics.

The cumulative impact of these public interventions is significant due to their frequency, with ECB presidents having the largest average impact, followed by national central bank governors and then ECB board members. The study highlights the importance of looking beyond the ECB President and Executive Board members when analyzing monetary policy communication in a heterogeneous monetary union.