Does the Clarity of Inflation Reports Affect Volatility in Financial Markets? PDF Download

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Does the Clarity of Inflation Reports Affect Volatility in Financial Markets?

Does the Clarity of Inflation Reports Affect Volatility in Financial Markets? PDF Author: Mr.Ales Bulir
Publisher: International Monetary Fund
ISBN: 1484380401
Category : Business & Economics
Languages : en
Pages : 29

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Book Description
We study whether clarity of central bank inflation reports affects return volatility in financial markets. We measure clarity of reports by the Czech National Bank, the European Central Bank, the Bank of England, and Sveriges Riksbank using the Flesch-Kincaid grade level, a standard readability measure. We find some evidence, mainly for the euro area, of a negative relationship between clarity and market volatility prior to and during the early stage of the global financial crisis. As the crisis unfolded, there is no longer robust evidence of a negative connection. We conclude that reducing noise using clear reports is possible but not without challenges, especially in times of crisis.