FOMC sentiment effects tested with ‘computational linguistics’

US Fed
Sentiment conveyed by by the US Fed’s FOMC appears to affect the economy

The sentiment conveyed by US Federal Reserve policymakers appears to have an impact on outcomes in the real economy, according to a staff working paper published today (February 17) by the Bank of England.

The work – by economists Paul Hubert and Fabien Labondance, both of whom are affiliated with Sciences Po – harnesses "computational linguistics" to extract the sentiment from statements by Federal Open Market Committee (FOMC) members, filtering out information on fundamentals, expectations, mo