Skip to Main content Skip to Navigation
New interface
Journal articles

Mexico’s Monetary Policy Communication and Money Markets

Abstract : Central bank communication is becoming a key aspect of monetary policy. How much financial markets listen and, possibly, understand Banco de Mexico’s communication on its monetary policy stance should be a key consideration for the central bank to further modernize its monetary policy toolkit. In this paper, we tackle this issue empirically by using our own index of the tone of communication based on Banco de Mexico’s speeches and statements and find that Mexican money markets do not only listen but they also understand the stance of monetary policy conveyed in the central bank’s words. Regarding the ability to listen we find that both the volatility and volume in the money market rates change right after communication from Banco de Mexico’s governing body. As for the markets’ understanding, we document a statistically significant rise in money market rates the more hawkish communication is. All in all, our results show strong evidence of effective oral and written communication from the Central Bank towards Mexico’s money markets.
Document type :
Journal articles
Complete list of metadata

Cited literature [12 references]  Display  Hide  Download
Contributor : Elisabeth Lhuillier Connect in order to contact the contributor
Submitted on : Wednesday, December 11, 2019 - 9:55:42 AM
Last modification on : Monday, February 21, 2022 - 1:12:08 PM
Long-term archiving on: : Thursday, March 12, 2020 - 5:04:52 PM


Publication funded by an institution


Distributed under a Creative Commons Attribution 4.0 International License



Alicia Garcia-Herrero, Eric Girardin, Arnoldo Lopez-Marmolejo. Mexico’s Monetary Policy Communication and Money Markets. International Journal of Economics and Finance, 2019, 11 (2), pp.81. ⟨10.5539/ijef.v11n2p81⟩. ⟨hal-02402656⟩



Record views


Files downloads