MONETARY POLICY SIGNALING, CLARITY OF CENTRAL BANK COMMUNICATION AND SOVEREIGN RISK SPREADS: EVIDENCES FOR BRAZIL

Abstract

The literature about both sovereign risk spreads and central bank communication has evolved, but separately. The present study aims to fill this gap analyzing the relation between central bank communication and the sovereign risk spreads. We provide empirical evidence of the effects of monetary policy signaling and clarity of central bank communication over the sovereign risk spreads. The results indicate the sovereign risk spreads respond to the monetary policy signaling. Moreover, the clarity of the central bank communication can reduce the sovereign risk spreads.