World.Alpha-News.org ➤ The news of the world is here

In a recent study conducted by researchers from Giessen University in Germany titled "The Emotions of Monetary Policy," it was discovered that small changes in facial expressions or tone of voice can significantly impact financial markets. The study focused on analyzing the facial expressions and vocal emotions of Christine Lagarde, the President of the European Central Bank (ECB), and her predecessor Mario Draghi during press conferences following ECB interest rate decisions.

The study found that Mario Draghi's messages, particularly when accompanied by a smile, had a more pronounced effect on government bond yields, the euro, and euro zone stocks, regardless of whether they were dovish (suggesting lower rates) or hawkish (suggesting higher rates).

Interestingly, Lagarde's market influence was enhanced when she displayed an angry expression. The research revealed that Lagarde expressed more emotion compared to Draghi, and both central bankers tended to exhibit anger when euro zone inflation deviated from the ECB's 2% target.

The study underscores the significance of non-verbal communication and emotional nuances for policymakers and traders. It aligns with previous research indicating that the tone of voice and emotional expressions of central bankers can impact stock prices and asset values in financial markets.

This research builds on a historical anecdote, suggesting that even a subtle gesture, such as a raised eyebrow by Bank of England governors in the early 20th century, could effectively convey a message during private conversations.