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FOMC Communications and the Predictability of Near-Term Policy Decisions

In February 1994, the FOMC began a new era in transparency, gradually building a communications apparatus that conveys information about the Committee’s decisions and expectations. Has the new apparatus improved the public’s ability to predict FOMC interest rate decisions? New research based on the prices of fed funds futures shows that over the past decade, it has, especially over horizons of two to three months.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.

Suggested Citation

Carlson, John B., Ben R. Craig, Patrick Higgins, and William Melick. 2006. “FOMC Communications and the Predictability of Near-Term Policy Decisions.” Federal Reserve Bank of Cleveland, Economic Commentary 6/1/2006.