## From Text to Quantified Insights: A Large-Scale LLM Analysis of Central Bank Communication

_IMF Working Papers, June 6, 2025_

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## Bibliographic details
- Authors: Thiago Christiano Silva, Kei Moriya, Romain M Veyrune
- Published: June 6, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229013802.001

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### Overview
- Paper introduces a classification framework to analyze central bank communications across four dimensions: topic, communication stance, sentiment, and audience.
- Uses a fine-tuned large language model trained on central bank documents to classify individual sentences and convert policy language into systematic, quantifiable metrics.
- Applied to a multilingual dataset of 74,882 documents from 169 central banks spanning 1884 to 2025.
- Presents what the authors describe as the most comprehensive empirical analysis of central bank communication to date.

### Methodology
- Classification framework dimensions: topic, communication stance, sentiment, audience.
- Model approach: fine-tuned large language model trained on central bank documents to label individual sentences.
- Dataset scale and coverage:
  - 74,882 documents
  - 169 central banks
  - Time span: 1884 to 2025

### Key Findings
- Monetary policy communication changes significantly with inflation targeting:
  - Backward-looking exchange rate discussions give way to forward-looking statements on inflation, interest rates, and economic conditions.
- Directional signals:
  - Development of a directional communication index capturing signals about future policy rate changes and unconventional measures, including forward guidance and balance sheet operations.
  - This unified signal helps explain future movements in market rates.
- Audience tailoring quantified:
  - First systematic quantification showing central banks tailor messages to audiences.
  - Audience-specific risk communication has remained stable for decades, suggesting a structural and deliberate tone.
  - Typical patterns by audience:
    - Neutral, fact-based language with financial markets
    - Confidence-building language with the public
    - Emphasis on risks when communicating to governments

### Directional Communication Index
- Captures signals about:
  - Future policy rate changes
  - Unconventional measures, including forward guidance and balance sheet operations
- Empirical role:
  - The unified signal helps explain future movements in market rates

### Audience-Specific Communication
- Systematic quantification shows consistent audience tailoring:
  - Stability: Audience-specific risk communication stable for decades
  - Tone by audience:
    - Financial markets: neutral, fact-based language
    - Public: confidence-building language
    - Government: highlighting risks

### Crisis Dynamics and Predictive Power
- Communication shifts markedly during crises:
  - Confidence-building rises in communication to the financial sector and government
  - Risk signaling increases for other audiences during crises
- Forward-looking risk communication predicts future market volatility:
  - Demonstrates that central bank language influences both monetary and financial stability channels

### Policy Implications and Interpretation
- Communication as active policy tool:
  - Findings provide novel evidence that communication is an active policy tool for steering expectations and shaping economic and financial conditions
- Importance of measuring language:
  - Quantified, directional, and audience-specific signals can inform assessments of expected policy actions and potential financial stability implications

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_Source: https://www.imf.org/en/publications/wp/issues/2025/06/06/from-text-to-quantified-insights-a-large-scale-llm-analysis-of-central-bank-communication-567522_