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RWP 22-11, September 2022

A purported benefit of state-based forward guidance is that the private sector adjusts the expected stance of policy without further policymaker communications. This assumes a shared understanding of how policymakers are interpreting the data and that policymakers are consistent in their assessment of the data. Using text analysis, we test whether the FOMC's introduction of state-based forward guidance in December 2012 changed the tone of policymaker communications. We find that policymakers tended to downplay positive data following the introduction of the guidance, in effect leaning against the data and reinforcing the dependence of policy expectations on policymaker communications.

JEL classifications: E30, E40, E50, G12

Article Citation

  • Doh, Taeyoung, Joseph Gruber, and Dongho Song. “Leaning Against the Data: Policymaker Communications under State-Based Forward Guidance.” Federal Reserve Bank of Kansas City, Research Working Paper no. 22-11, September. Available External Link


Taeyoung Doh

Senior Economist

Taeyoung Doh is a Senior Economist in the Economic Research Department of the Federal Reserve Bank of Kansas City. He joined the department in July 2007. He received a bachelor&#…

Joseph Gruber

Executive Vice President and Director of Research

Joseph (Joe) Gruber is the executive vice president and director of research for the Bank. He leads the Bank’s Research Division, as well as the staff responsible for Regional Af…