Artificial intelligence and central bank communication: The case of the ECB

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IES Working Paper ; No. 29/2023

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies
• Subject: Artificial intelligence ; central bank communication ; monetary policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fanta, Nicolas ; Horváth, Roman
• Event: Veröffentlichung
• (who): Charles University in Prague, Institute of Economic Studies (IES)
• (where): Prague
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/286358
• Last update: 10.03.2025, 11:45 AM CET