Title: On Fed watchers' eyes: Hawks, doves and monetary Policy
Authors: Klodiana Istrefi - Banque de France (France) [presenting]
Abstract: A novel measure of perceived policy preferences for the FOMC is introduced, which reflects the perceptions of market participants as expressed in newspaper articles, financial media outlets and business reports of Fed watchers in the US. Following the language of financial markets, we categorize the information on the preferences of FOMC members in two leanings, hawk and dove, which represent the weights that market participants believe each member assigns to one of the dual objective of the Federal Reserve. Investigating the period 1960-2015, we find substantial variation in the perceived Hawk/Dove scale of the FOMC. Overall, markets have perceived a hawkish FOMC, especially for the most part of Arthur Burns, Paul Volcker and Alan Greenspan's years. Furthermore, a clear dovish bias of the FOMC is perceived during the last years of Fed chairmanship of Martin (second part of the 1960s) and during the years of Ben Bernanke and Janet Yellen. Reserve Bank Presidents are systematically perceived as hawkish and to have more persistent preferences while Board Governors are perceived as swinging more often between types. Overall, these results match well with narratives on monetary policy in the US. Moreover, we observe a good match of the measure of perceived preferences with FOMC voting patterns and with existing proxies for policy preferences.