Market volatility often spikes during Federal Open Market Committee (FOMC) meetings as traders closely monitor the "surprise gap"—the difference between expected and actual policy announcements. The language used by the central bank in its communications can significantly influence market reactions, as investors interpret these cues to adjust their strategies. Additionally, cross-asset reactions, where movements in one market affect others, contribute to the short-term volatility observed during these meetings.
FOMC Meetings Trigger Market Volatility Through Surprise Gaps and Language
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