Open:FactSet Forum

Examining the Sentiment of Federal Reserve Monetary Policy

prattle
sentiment
alternative-data
news

(Christian Cifelli) #1

The Prattle Central Bank Analytics DataFeed provides sentiment scores on central bank communication based on the historical relationship between a bank’s language and corresponding market activity.

Let’s examine how the recent announcement by the Federal Reserve to raise rates while signaling a slow in hikes for next year was viewed through the lens of Prattle.

We can see that the feed offers us a score for both the FOMC Statement and the Official Press Release. The residual score offers a direct comparison to previous 12 months of scores for that ‘speaker’.

As defined by Prattle, positive scores indicate hawkish sentiment and negative numbers indicate dovish sentiment. Subjectively, Prattle looks at residuals scores with absolute values between 0 and 0.25 as “neutral”, 0.25 and higher as “hawkish” or “dovish”.

While the Federal Reserve residual scores for the December 19th meeting were negative, indicating a negative tone and outlook on the economy, the did not break in to dovish.