Staff Working Paper No. 1,194
Eric Tong and Rennae Cherry
We identify central bank communication shocks designed to measure how policy messages reach households. The shocks are constructed from central bank text, where policy messages originate, and newspaper narratives, through which households encounter them. We compare central bank narratives with pre-announcement newspaper narratives and decompose the resulting narrative surprises into stance and information communication shocks. Applying the framework to the Bank of Canada, the Bank of England, and the Federal Reserve, we find that central bank narratives shape media coverage and move households’ one-year-ahead inflation expectations. Tighter stance communication shocks lower inflation expectations, while expansionary information communication shocks raise them, especially when households’ attention is high. Conventional shocks identified with high‑frequency asset-price moves do not deliver these responses, underscoring the importance of measuring central bank communication as households experience it. Taken together, the results qualify the view that central bank communication rarely reaches the public, but also show that its effects depend on how central bank messages are received and perceived.
Central bank communications that reach the public 