ECB speeches and interviews move markets as much as policy decisions, study finds
Markets react not only to ECB policy decisions but also to policymaker speeches and interviews, whose cumulative impact can rival formal announcements, new research finds.
A recent ECB study reveals that speeches and interviews by European Central Bank policymakers can have a significant impact on financial markets, comparable to actual policy decisions. The research, conducted by economists Klodiana Istrefi, Florens Odendahl and Giulia Sestrieri, examined the effect of these communications on the euro area's markets.
The authors built a comprehensive database of formal policy decisions and approximately 5,000 public events between 1999 and the early part of 2024. The findings show that around 45% of formal policy announcements caused a significant market reaction, while the impact of inter-meeting communication events was less consistent but still noteworthy.
ECB presidents had the largest influence, followed by national central bank governors and then ECB board members. The study emphasizes that while formal policy announcements are focused specifically on monetary policy, inter-meeting communications cover a wider range of topics, making their cumulative effect on market expectations substantial.
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