BHP’s $39 Billion Copper Play Was Years in the MakingBloomberg Economics’ Fed sentiment index — powered by a natural language processing algorithm based on more than 60,000 Fed headlines — shows that in December, Powell delivered a major pivot. By hinting at a swifter shift toward rate cuts, he gave markets a boost and helped the economy dodge a downturn.So far, so good — but there’s a catch.
That’s a provocative idea — and one that has captured the interest of the markets. But it’s hard to back up with either theory or data — the numbers show net interest income has been a drag on spending power. The Fed hadn’t shifted policy — the federal funds rate hadn’t moved — but Powell’s language had changed, and that sent an important signal.Ellen Meade — a professor at Duke and former Fed economist — was an early pioneer of using advances in data science to parse monetary policy signals.
Data at the time showed the three-month moving average of unemployment rising from a low of 3.5% in early 2023 to 3.8% in October — edging toward the 0.5ppt increase that typically signals the start of a downturn. The Fed’s Beige Book — a collection of anecdotes about the state of the economy — confirmed the bleak picture. Payroll numbers looked robust, but census data from the Bureau of Labor Statistics suggest the final revisions released in 2025 will be lower.
Perhaps that’s why Powell has already started a reverse pivot. Speaking on that April panel on the margins of the IMF meeting, he acknowledged that the “recent data have clearly not given us greater confidence” on disinflation. The Fed can keep rates steady for “as long as needed” to bring price changes back to target, he said.
Markets have already shifted expectations for Fed cuts this year from 160 basis points in forecasts at the end of 2023 to 35 basis points in late April. That’s plausible – favorable statistical effects mean inflation is set to drift down into the summer. A July cut is still in play. The sample covers more than 6,200 unique speaking engagements and statements made by FOMC members since 2009, totaling more than 60,000 Bloomberg News headlines. After filtering the headlines for relevancy, the NLP algorithm was applied to about 47,000 relevant headlines. The algorithm is 71% accurate at scoring headlines between hawkish, dovish and neutral, and 96% of scores are within one-point of the true reading.
Finance Finance Latest News, Finance Finance Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: KitcoNewsNOW - 🏆 13. / 78 Read more »