Article(electronic)February 11, 2021

Furor over the Fed: A President's Tweets and Central Bank Independence

In: CESifo economic studies: a joint initiative of the University of Munich's Center for Economic Studies and the Ifo Institute, Volume 67, Issue 1, p. 106-127

Camous, Antoine; Matveev, Dmitry

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Abstract

Abstract
We illustrate how financial market data are informative about the interactions between monetary and fiscal policy. Federal funds futures are private contracts that reflect investor's expectations about future monetary policy decisions. By relating price movements of these contracts with President Trump's tweets on monetary policy, we explore how financial market participants have perceived attempts by the President to influence monetary policy decisions. Our results indicate that market participants expected the Federal Reserve Bank to adjust monetary policy in the direction suggested by President Trump. (JEL codes: E44, E52, and E58)

Languages

English

Publisher

Oxford University Press (OUP)

ISSN: 1612-7501

DOI

10.1093/cesifo/ifaa020

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