The Fed's Next Move Might Be Almost Certain—But Here's How the Post-Meeting Comments Can Move Markets

Core Insights - The Federal Reserve press conferences significantly influence financial markets, particularly Treasury yields and risk asset prices, due to unexpected statements made by officials [2][3][11] - The research indicates that the post-announcement press conference is the most impactful source of surprises compared to policy statements or meeting minutes [4][11] Economic Implications - Federal Reserve press conferences are crucial for predicting inflation and interest rate trends, as they provide insights into future monetary policy directions [5][11] - The study highlights that financial markets react strongly to surprises in Fed communications, with "hawkish" surprises leading to lower inflation expectations and declining stock prices [8][9] Research Methodology - Researchers developed a Monetary Policy Event Study Database to track market responses to various forms of "Fedspeak," quantifying the impact of unexpected statements over time [6][7] - The findings suggest that ignoring information from press conferences may lead to overlooking significant monetary news [12]