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Mind the Shift: Decoding Monetary Policy Stance from FOMC Statements with Large Language Models

About

Federal Open Market Committee (FOMC) statements are a major source of monetary-policy information, and even subtle changes in their wording can move global financial markets. A central task is therefore to measure the hawkish--dovish stance conveyed in these texts. Existing approaches typically treat stance detection as a standard classification problem, labeling each statement in isolation. However, the interpretation of monetary-policy communication is inherently relative: market reactions depend not only on the tone of a statement, but also on how that tone shifts across meetings. We introduce Delta-Consistent Scoring (DCS), an annotation-free framework that maps frozen large language model (LLM) representations to continuous stance scores by jointly modeling absolute stance and relative inter-meeting shifts. Rather than relying on manual hawkish--dovish labels, DCS uses consecutive meetings as a source of self-supervision. It learns an absolute stance score for each statement and a relative shift score between consecutive statements. A delta-consistency objective encourages changes in absolute scores to align with the relative shifts. This allows DCS to recover a temporally coherent stance trajectory without manual labels. Across four LLM backbones, DCS consistently outperforms supervised probes and LLM-as-judge baselines, achieving up to 71.1% accuracy on sentence-level hawkish--dovish classification. The resulting meeting-level scores are also economically meaningful: they correlate strongly with inflation indicators and are significantly associated with Treasury yield movements. Overall, the results suggest that LLM representations encode monetary-policy signals that can be recovered through relative temporal structure.

Yixuan Tang, Yi Yang• 2026

Related benchmarks

TaskDatasetResultRank
Sentiment AnalysisFOMC
Accuracy71.08
44
Meeting-level stance correlationPPI YoY (meeting-level)
Pearson Correlation Coefficient0.4799
18
Meeting-level stance correlationCPI YoY (meeting-level)
Pearson Correlation0.5021
18
Regression of Treasury yield levelsFOMC Stance Scores 2Y Treasury Yield
Beta Coefficient2.121
6
Regression of Treasury yield levelsFOMC Stance Scores 10Y Treasury Yield
Beta0.796
6
Regression of Treasury yield levelsFOMC Stance Scores 20Y Treasury Yield
Beta0.852
6
Stance Scoring CorrelationFOMC Statements CPI 2008–2015 (P2)
Pearson Correlation (r)0.108
4
Stance Scoring CorrelationFOMC Statements CPI P3 2015–2020
Pearson Correlation Coefficient (r)0.339
4
Stance Scoring CorrelationFOMC Statements PPI P2 2008–2015
Pearson Correlation (r)0.228
4
Stance Scoring CorrelationFOMC Statements PPI P4 2020–2025
Pearson Correlation (r)0.686
4
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