The Fed's Fine-Tune: Coarse Statements and Predictive Pressers

Byun, Ryan; Fees, Bennett; Jacobson, Margaret M.; Walker, Todd B.

doi:10.17016/FEDS.2026.029

Working Paper

The Fed's Fine-Tune: Coarse Statements and Predictive Pressers

Abstract: Central bank communications, particularly FOMC statements and press conferences, play a crucial role in shaping financial market expectations. Using large language models to quantify central bank content, this paper demonstrates how sentiment aligns with traditional market-based monetary policy measures. We show that press conferences correlate with future policy to a greater extent than other communications. While FOMC statements coarsely signal the current stance of policy, press conferences fine-tune the message, which helps market participants revise their expectations about future policy.

JEL Classification: E52; E58; E31; E32;

https://doi.org/10.17016/FEDS.2026.029