Market anticipation of monetary policy actions and interest rate levels in regards to European asset valuation.

Abstract

This thesis examines the anticipation of asset price movements in response to monetary policy decisions by the European Central Bank (ECB) and the Federal Reserve (Fed) from 2018 to 2023. It focuses on both conventional and unconventional measures. The ECB's main refinancing rate and the Fed's approach to interest rates highlight distinct monetary policy strategies during this period, showcasing flexibility and responsiveness to economic changes. The thesis also delves into the use of quantitative easing by both central banks, underlining their divergent approaches in terms of speed, inflation targeting, and communication. This sets the stage for a deeper investigation into the anticipation phenomenon and its effects on monetary policy, economic sentiment, and asset prices.