Talking Less and Moving the Market More: Is this the Recipe for Monetary Policy Effectiveness? Evidence from the ECB and the Fed

Abstract

This paper examines the impact of monetary policy decisions and central bank’s announcements on the full spectrum of the American and European yield curve over the sample period January 1999 to June 2006. We find that on monetary policy committee meeting days both the ECB and the Fed can move market rates using either the monetary policy or the news shock. However, the Fed is able to move the long-end of the term structure more effectively than the ECB. Moreover, in the period under examination the Fed has been more able to move European interest rates of all maturities than the ECB to move American rates.