Tone of PBoC moves markets, says Bank of Finland paper
Markets are effectively using PBoC speeches as ‘monetary policy instrument’, says researcher
The tone of speeches from the People’s Bank of China summarising committee meetings has a significant influence on stock prices, says a paper published by the Bank of Finland.
In Does People’s Bank of China communication matter?, Hamza Bennani uses a financial dictionary to identify negative words within speeches, then compute the tone of the speech by assessing the prevalence of negative words. He then uses a “high-frequency methodology to estimate the effect of tone on stock prices”.
The
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