Please note, due to essential maintenance online transactions will not be possible between 02:30 and 04:00 BST, on Tuesday 17th September 2019 (22:30-00:00 EDT, 17 Sep, 2019). We apologise for any inconvenience.
In an effort to increase transparency, the chair of the Federal Reserve now holds a press conference (PC) following some, but not all, Federal Open Market Committee (FOMC) announcements. Evidence from financial markets shows that investors lower their expectations of important decisions on days without PCs and that these announcements convey less price-relevant information. Correspondingly, we show that investors pay more attention to upcoming announcements with PCs. This coordination of attention can reduce welfare in models of the social value of public information. Consistent with theories of investor attention, the market risk premium is larger on days with PCs.