Fed Sentiment Turning More Dovish

Apollo Chief Economist

Running the Fed minutes through a natural language processing model shows that the Fed is starting to turn more dovish, see chart below, suggesting that we are approaching the peak in this rate hike cycle and that the Fed is worrying less about inflation and more about the tighter credit conditions and the associated ongoing slowdown in growth.

Source: Bloomberg (ticker BIFIFEDA), Apollo Chief Economist. Note: Methodology: Bloomberg’s Federal Reserve natural language processing model calculates a score for the opening statement of the FOMC meeting starting in April 2011. The model uses a neural network to predict the dovishness vs. hawkishness of a sentence. Weights are applied for more or less participant consensus (e.g. “some participants” vs “all participants”). The final score is a weighted ratio of dovish vs. hawkish sentences. Positive scores are hawkish and negative scores are dovish.

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