The Fed's Fine-Tune: Coarse Statements and Predictive Pressers

Ryan Byun (), Bennett Fees, Margaret Jacobson and Todd Walker ()

No 2026-029, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Central bank communications, particularly FOMC statements and press conferences, play a crucial role in shaping financial market expectations. Using large language models to quantify central bank content, this paper demonstrates how sentiment aligns with traditional market-based monetary policy measures. We show that press conferences correlate with future policy to a greater extent than other communications. While FOMC statements coarsely signal the current stance of policy, press conferences fine-tune the message, which helps market participants revise their expectations about future policy.

Keywords: central bank communication; large language models (LLMs); monetary policy transmission; empirical monetary economics (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 E58 (search for similar items in EconPapers)
Pages: 73 p.
Date: 2026-04
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:103339

DOI: 10.17016/FEDS.2026.029

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