Monetary Policy Leaks Are Frequent and Tend To Have Big Market Impact, ECB Blog Says
19 May 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – Governing Council leaks about monetary policy are frequent and have a sizable impact on financial markets, according to a blog published by the European Central Bank on Friday.
Unattributed comments about ECB monetary policy decisions were ‘frequent, but their number has recently declined’, the article, written by three economists from the ECB, the Austrian National Bank and the Bank for International Settlements, said.
Media reports of such statements tended to have ‘large effects on financial markets’, with the authors’ research showing that market reactions were ‘15-30% larger than the average effect of public statements by Governing Council members.’
The article said that whilst in the early years of the ECB’s monetary policy, leaks occurred ‘almost exclusively before Governing Council meetings,’ more recently however, there had been ‘a substantial increase in post-meeting leaks.’
They argued that ‘leaks after meetings can weaken the effects of official ECB policy announcements.’ Attributed statements shortly after the press conference tended to reinforce this trend following the announcement of the ECB’s policy decisions, whereas ‘leaks that occur shortly after the press conference tend to move rates in the opposite direction, i.e. they again go against the policy line.’