The effect of FOMC votes on financial markets

Carlos Madeira; Joao Antonio Rodrigues Madeira

doi:10.1162/rest_a_00770

The effect of FOMC votes on financial markets

Carlos Madeira, Joao Antonio Rodrigues Madeira

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This article shows that since votes of FOMC members have been included in press statements, stock prices increase after the announcement when votes are unanimous but fall when dissent (which typically is due to preference for higher interest rates) occurs. This pattern started prior to the 2007--2008 financial crisis. The differences in stock market reaction between unanimity and dissent remain even controlling for the stance of monetary policy and consecutive dissent. Statement semantics also do not seem to explain the documented effect. We find no differences between unanimity and dissent with respect to impact on market risk and Treasury securities.

Original language	English
Pages (from-to)	921-932
Journal	Review of economics and statistics
Volume	101
Issue number	5
DOIs	https://doi.org/10.1162/rest_a_00770
Publication status	Published - 11 Dec 2019

Bibliographical note

© 2018 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

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10.1162/rest_a_00770

C_J_Madeira
© 2018 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details
Accepted author manuscript, 250 KB

Joao Antonio Rodrigues Madeira
- jm1729york.acuk
- Economics - Senior Lecturer, Former employee
Person: Academic

Cite this

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title = "The effect of FOMC votes on financial markets",

abstract = "This article shows that since votes of FOMC members have been included in press statements, stock prices increase after the announcement when votes are unanimous but fall when dissent (which typically is due to preference for higher interest rates) occurs. This pattern started prior to the 2007--2008 financial crisis. The differences in stock market reaction between unanimity and dissent remain even controlling for the stance of monetary policy and consecutive dissent. Statement semantics also do not seem to explain the documented effect. We find no differences between unanimity and dissent with respect to impact on market risk and Treasury securities.",

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The effect of FOMC votes on financial markets

Abstract

Bibliographical note

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Joao Antonio Rodrigues Madeira

Cite this