When Bankers Go to Hail: Insights into Fed–Bank Interactions from Taxi Data

We introduce taxi ridership between the Federal Reserve (Fed) Bank of New York and large financial institutions headquartered in New York City as a novel proxy for Fed–bank face-to-face interactions. We document a negative relation between past Fed–bank interactions and future stock market returns, particularly on days around the Fed’s public announcements. We also find significantly elevated Fed–bank interactions immediately following the lifting of the Federal Open Market Committee blackout. Our findings suggest that the Fed increases its information gathering via face-to-face interactions when it possesses negative private information about the condition of the economy.