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SUMMARY:Tough Talk: The Fed and the Risk Premium
DTSTART:20230609T103000
DTEND:20230609T120000
DTSTAMP:20260404T062820Z
UID:864cf8da656ad14a6453fc592e07c0d926f31d82ec31b168283f4078
CATEGORIES:Conferences - Seminars
DESCRIPTION:Anna Cieslak | Duke's Fuqua School of Business\nThe Federal Re
 serve faces a challenge of supporting the economy by cutting rates aggress
 ively in downturns and potentially creating uncertainty about future outpu
 t gap\, inflation\, and interest rates. We study how the Fed’s communica
 tion of its forward-looking policy stance affects risk premia in financial
  markets. We analyze private deliberations of the Federal Open Market Comm
 ittee (FOMC) to elicit a nuanced policy stance beyond the current policy a
 ction. We show that more hawkish (dovish) views predict economically signi
 ficant reductions (increases) in risk premia during the subsequent interme
 eting period. The risk premium reaction unfolds gradually in the days afte
 r the announcement. The effect is not subsumed by the content of the FOMC 
 statement and is distinct from the “on impact” risk-premium reduction 
 caused by surprise rate cuts at the FOMC announcements\, documented in the
  literature. We trace how the stance in the meeting is revealed via the Fe
 d’s public communication\, which we then tie to intermeeting movements i
 n premia. The results highlight the role of communication in managing publ
 ic risk perceptions.
LOCATION:UniL Campus\, Room Extra 126
STATUS:CONFIRMED
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