Monetary policy analysis using natural language processing: Evaluating the People's Bank of China's minutes and report summary with the Taylor Rule

Shiwei Su, Ahmad Hassan Ahmad, Justine Wood and Songbo Jia

Economic Modelling, 2025, vol. 149, issue C

Abstract: This study investigates the predictive power of the PBOC's concise communication tools—meeting minutes and monetary policy report summaries—in forecasting monetary policy decisions. Existing literature primarily focuses on comprehensive monetary policy reports, often overlooking the effectiveness of brief communication forms like meeting minutes. Using Natural Language Processing (NLP) techniques and an ordered probit model within the Taylor Rule framework, we quantify economic, and inflation signals from PBOC texts between 2002Q3 and 2023Q4. Our findings reveal that economic signals from meeting minutes significantly influence policy rate changes, while inflation signals remain relatively weaker. Further comparative analysis shows that although monetary policy summaries provide balanced signals due to their comprehensive nature, meeting minutes offer stronger short-term predictive power owing to their concise format and timeliness. These results underscore the importance of balanced economic and inflation communication, enhancing our understanding of how central bank textual signals shape policy predictability and market expectations.

Keywords: Central bank communication; The PBOC; The Taylor Rule; Predictability; Natural language processing (search for similar items in EconPapers)
JEL-codes: E52 E58 E61 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999325001166
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:149:y:2025:i:c:s0264999325001166

DOI: 10.1016/j.econmod.2025.107121

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().