Discussion paper

DP17041 Are Households Indifferent to Monetary Policy Announcements?

We study the impact of the Fed’s monetary policy announcements on households’ expectations by comparing responses to the Survey of Consumer Expectations before and after Federal Open Market Committee (FOMC) meetings, over the period 2013-2019. We find that Fed decisions affect expectations of interest rates on savings accounts, particularly for respondents with high financial and numerical literacy. The effect is particularly strong in the first few days after the announcement of the decision and decays in the days that follow. The impact of monetary policy announcements on inflation expectations is muted, even in response to some of the most relevant meetings of the FOMC that took place during that period. Expectations of personal financial conditions are barely affected. Our results stand in contrast to experimental studies that find strong effects of monetary policy and other macroeconomic news on expectations of households receiving a specific treatment, suggesting that the news naturally reaching the general population may provide weaker signals.


De Fiore, F, M Lombardi and J Schuffels (2022), ‘DP17041 Are Households Indifferent to Monetary Policy Announcements?‘, CEPR Discussion Paper No. 17041. CEPR Press, Paris & London. https://cepr.org/publications/dp17041