Artificial Intelligence and Central Bank Communication: The Case of the ECB

Nicolas Fanta and Roman Horvath
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Nicolas Fanta: Institute of Economic Studies, Charles University, Prague

No 2023/29, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We examine whether artificial intelligence (AI) can decipher European Central Bank´s communication. Employing 1769 inter-meeting verbal communication events of the European Central Bank´s Governing Council members, we construct an AI-based indicator evaluating whether communication is leaning towards easing, tightening or maintaining the monetary policy stance. We find that our AI-based indicator replicates well similar indicators based on human expert judgment but at much higher speed and at much lower costs. Using our AI-based indicator and a number of robustness checks, our regression results show that ECB communication matters for the future monetary policy even after controlling for financial market expectations and lagged monetary policy decisions.

Keywords: Artificial intelligence; central bank communication; monetary policy (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2023-09, Revised 2023-09
New Economics Papers: this item is included in nep-ain, nep-ban, nep-big, nep-cba, nep-cmp, nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2023_29

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