Measuring Communication Quality of Interest Rate Announcements

Citation:

Jonathan Benchimol, Itamar Caspi, and Sophia Kazinnik. Submitted. “Measuring Communication Quality of Interest Rate Announcements”.
Paper323 KB

Abstract:

This paper employs text mining analysis to measure the comprehensibility and information quality of the interest rate announcements published by the Bank of Israel over the past two decades. We examine these texts for ease of comprehension and the sentiment conveyed to the public and benchmark them against comparable texts published by the Fed and the ECB. The findings reveal that readers require fewer years of education to comprehend the Bank of Israel interest rate announcements than they do to understand the interest rate announcements published by the Fed and the ECB. In addition, we show that the sentiment within these announcements is aligned with economic fluctuations and that there is a direct correlation between the uncertainty the communications reflect and the volatility of the domestic market.

Last updated on 12/17/2020