Fed Chairs’ Communication During Congressional Testimonies
Posted: Sat Jul 12, 2025 5:45 am
More Than Words:
Michelle Alexopoulos (University of Toronto)
Economic policies enacted by the government and its agencies have large impacts on the welfare of businesses and individuals—especially those related to fiscal and monetary policy. Communicating the details of the policies to the public is an important and complex undertaking. Policymakers tasked with the communication not only need to present complicated information in simple and relatable terms, but they also need to be credible and convincing—all the while being at the center of the media’s spotlight.
In this briefing, I will discuss recent research on the applications of AI to monetary policy communications, and lessons learned to date. In particular, I will report on my recent ongoing project with researchers at the phone number library Bank of Canada that analyzes the effects of emotional cues by the Chairs of the U.S. Federal Reserve on financial markets during congressional testimonies.
While most previous work has mainly focused on the effects of a central bank’s highly scripted messages about its rate decisions delivered by its leader, we use resources from the Internet Archive, CSPAN and copies of testimony transcripts and apply a variety of tools and techniques to study the both the messages and the messengers’ delivery of them.
I will review how we apply recent advances in machine learning and big data to construct measures of Federal Reserve Chair’s emotions, expressed via his or her words, voice, and face, as well as discuss challenges encountered and our findings to date. In all, our initial results highlight the salience of the Fed Chair’s emotional cues for shaping market responses to Fed communications. Understanding the effects of non-verbal communication and responses to verbal cues may help policy makers improve upon their communication strategies going forward.
Michelle Alexopoulos (University of Toronto)
Economic policies enacted by the government and its agencies have large impacts on the welfare of businesses and individuals—especially those related to fiscal and monetary policy. Communicating the details of the policies to the public is an important and complex undertaking. Policymakers tasked with the communication not only need to present complicated information in simple and relatable terms, but they also need to be credible and convincing—all the while being at the center of the media’s spotlight.
In this briefing, I will discuss recent research on the applications of AI to monetary policy communications, and lessons learned to date. In particular, I will report on my recent ongoing project with researchers at the phone number library Bank of Canada that analyzes the effects of emotional cues by the Chairs of the U.S. Federal Reserve on financial markets during congressional testimonies.
While most previous work has mainly focused on the effects of a central bank’s highly scripted messages about its rate decisions delivered by its leader, we use resources from the Internet Archive, CSPAN and copies of testimony transcripts and apply a variety of tools and techniques to study the both the messages and the messengers’ delivery of them.
I will review how we apply recent advances in machine learning and big data to construct measures of Federal Reserve Chair’s emotions, expressed via his or her words, voice, and face, as well as discuss challenges encountered and our findings to date. In all, our initial results highlight the salience of the Fed Chair’s emotional cues for shaping market responses to Fed communications. Understanding the effects of non-verbal communication and responses to verbal cues may help policy makers improve upon their communication strategies going forward.