English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Zendy Open

Presents the pdf analysis as premium feature

PDF Analysis

Insights

Presents the summarisation as premium feature

Summarisation

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the zaia usage as premium feature

ZAIA

Zendy Tools

Zendy Plus

Presents the access of premium content as premium feature

Premium Content

ntil its February 1994 meeting, the Federal Open Market Committee (FOMC) followed the practice of announcing a “policy directive” approximately 45 days after the meeting in which it had been approved. This practice of delaying announcements had prompted some in Congress and the media to accuse the Fed of being unnecessarily secretive. While there is no long-term record of the Fed’s views on immediate disclosure of policy decisions, the Fed had argued in a 1976 Freedom of Information Act filing that announcing policy decisions immediately would commit it to a course of action, thereby impairing its ability to conduct monetary policy flexibly. Moreover, the Committee argued, the immediate announcement of policy decisions would create an undesirable “announcement effect,” thereby increasing the volatility of financial markets. Critics countered that the Fed’s failure to convey its intentions to the market in a timely fashion increased financial market uncertainty and volatility. Some maintained that the Fed’s disclosure practice effectively gave preference to large, sophisticated investors over average investors. While it is uncertain when the Fed’s position on immediate disclosure of FOMC policy decisions changed, the FOMC broke with tradition at its February 1994 meeting and announced a policy directive change immediately after voting on it. Although the Fed made no commitment to continue this practice, the next five policy changes were announced immediately and the FOMC formalized the practice of immediate disclosure at its February 1995 meeting. The purpose of this article is to investigate whether and how financial markets have responded to this change in the FOMC’s disclosure policy. Specifically, I investigate (1) whether the policy of immediate disclosure has created an announcement effect, and (2) whether the policy of immediate disclosure has increased or reduced financial market uncertainty.

Does the Fed's New Policy of Immediate Disclosure Affect the Market?