UBS Uses AI to Track Fed, ECB and BoJ Communication Tone: ECB Is the Most Hawkish, Fed Is Moderately More Hawkish, BoJ Momentum Has Weakened
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UBS Uses AI to Track Fed, ECB and BoJ Communication Tone: ECB Is the Most Hawkish, Fed Is Moderately More Hawkish, BoJ Momentum Has Weakened
The report builds an LLM-based central bank communication tone tracking framework, showing that since the Middle East conflict the ECB and Fed have become more hawkish, while BoJ's earlier hawkish momentum has moved into consolidation.
- UBS uses LLMs to analyze central bank officials’ speeches, interviews, and press conferences, scoring them on a hawkish/dovish scale.
- The dataset is updated daily, covers more than two decades of history, and can be used through an interactive dashboard and Python API.
- Since the conflict, ECB tone shifts have been the most hawkish, with charted sentiment change around +0.022; Fed around +0.016; and BoJ around -0.003.
- Since late last summer, the Fed maintained a dovish bias, but recently, as inflation wording strengthened, it has slowly turned more hawkish; Powell and Williams are more hawkish, while Barr is more dovish.
- ECB initially shifted in an inflation-driven direction before a rise in growth focus, resembling a stagflation-like response; Schnabel, Makhlouf and Nagel are on the hawkish side.
- BoJ’s hawkish momentum that built in late 2025 has slowed in early 2026, with communication becoming more balanced and appearing to be in a consolidation phase in the near term.
Report interpretation
Overview
This report presents the AI/LLM central bank communication tone-tracking tool built by UBS Evidence Lab and UBS Global Research to measure the hawkish or dovish bias of Fed, ECB and BoJ statements on policy-related speeches, interviews and press conferences.
Core views
The key conclusion is that the ECB's post-conflict shift to a more hawkish tone was the most pronounced, but it has already come off its high. The Fed remains overall in a dovish range, but stronger inflation wording has gradually shifted tone to the hawkish side. BoJ's previously accumulated hawkish momentum is weakening, and its communication has become more cautious and balanced. The report emphasizes that central bank communication tone changes are not driven solely by policy rates; they are shaped jointly by theme emphasis, speaker differences and macro shocks.
Analysis framework
The methodology identifies policy-relevant statements and assigns sentiment scores to central bank public communication text using an LLM, then aggregates these into hawkish/dovish metrics at the central bank level, theme level and speaker level. The report combines a long historical time series, pre/post-conflict changes, theme decomposition and cross-officer comparison to assess marginal changes in monetary policy communication.
Methodology notes
Hawkish/dovish sentiment scoring
Use a large language model to analyze policy-related statements in central bank speeches, interviews and press conferences, mapping them to a hawkish or dovish scale to track marginal changes in communication tone.
Inflation, Growth, Employment, Interest Rates, and Balance Sheet themes
Decompose central bank tone across different macro themes to identify whether shifts toward hawkishness or dovishness are mainly driven by inflation pressure, growth concern, the labor market, interest rate path, or balance sheet wording.
Post-Middle East Conflict Sentiment Shift
Using the conflict onset as an event node, compare policy communication sentiment changes across the Fed, ECB and BoJ to measure differences in central bank reactions after the shock.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- US rates and 2-year Treasury yieldsFed communication tone is relevant to short-end rate pricing
- Strengths
- The LLM sentiment indicator can complement policy rate and 2-year US Treasury yield monitoring, helping capture communication shifts.
- Weaknesses
- The Fed’s overall signal remains dovish, and the marginal hawkish shift is mainly from inflation language, without a clear deterioration in growth or labor tone.
- Comparison
- Compared with the ECB, Fed's post-conflict hawkish change is smaller in magnitude; compared with BoJ, Fed has shifted more hawkish.
- Risks
- Inflation, employment data, or policy shocks could decouple sentiment indicators from market rates in the short term.
- Euro area rates and euro assetsECB’s hawkish tone may affect the euro area rate curve and risk asset valuation
- Strengths
- ECB saw the largest post-conflict hawkish shift, and inflation-driven policy communication appears to have persistence.
- Weaknesses
- Growth and labor tone have already flattened, and overall tone is easing from earlier highs.
- Comparison
- ECB’s sentiment change is larger than that of the Fed and BoJ, but it is no longer at its peak.
- Risks
- If growth concerns intensify, inflation-driven hawkish pressure may be offset by growth risk.
- Japan rates and yen-linked assetsBoJ communication shifts affect Japanese rate normalization expectations
- Strengths
- The long-history indicator shows BoJ has gradually moved from dovish toward a more hawkish zone since 2020.
- Weaknesses
- Communication has become more balanced in early 2026, and earlier hawkish momentum did not continue to expand.
- Comparison
- BoJ’s post-conflict sentiment change is roughly negative, differing in direction from the hawkish shifts at ECB and Fed.
- Risks
- In the sample period, BoJ communication after the conflict is limited, so individual officials’ remarks may have a larger impact on short-term judgment.
- Multi-asset portfolioCentral bank communication tone changes influence rates, FX, credit and equity valuation
- Strengths
- Cross-bank, cross-theme and cross-speaker tone tracking can serve as a supportive signal for macro allocation.
- Weaknesses
- This tool provides communication-tone evidence and does not equate to direct investment advice or asset price forecasts.
- Comparison
- It captures expectation shifts at the communication level better than a single policy rate alone, but still needs to be combined with economic data and market prices.
- Risks
- Market risk, credit risk, rate risk, FX risk and correlation breakdown all may impact multi-asset returns.
Key data
- Report Date2026-04-15UBS Global Research publication date.
- Central Banks CoveredFed, ECB, BoJThe report focuses on the communication of the three major central banks in the United States, Eurozone and Japan.
- Data HistoryOver twenty yearsThe LLM tracking dataset covers more than twenty years and is updated daily.
- ECB Sentiment Change Since ConflictAround +0.022Charts show ECB tone changes as the most hawkish.
- Fed Sentiment Change Since ConflictAround +0.016Fed tone has moved from a previously dovish and stable stance to a more hawkish one, but overall remains at dovish levels.
- BoJ Sentiment Change Since ConflictAround -0.003BoJ did not sustain the earlier hawkish momentum after the conflict; on the margin, it is slightly more dovish.
- Fed Speaker DifferencesPowell, Williams more hawkish; Barr more dovishThe report states Powell is the most hawkish in the model, Williams second, and Barr on the dovish end.
- ECB Speaker DifferencesSchnabel, Makhlouf, Nagel hawkish; Rehn dovish; Lagarde centeredECB officials' remarks have been more differentiated after the conflict, but overall remain hawkish.
Impact & implications
This tracking framework gives investors a quantitative tool for observing central bank reaction functions and marginal changes in policy communication. If ECB and Fed inflation tone remains hawkish, rate markets may continue to price higher or longer-lived policy rates; if growth and labor tone continues to weaken, that could offset part of the inflation-driven hawkish signal. BoJ’s move toward a more balanced tone suggests that, in the near term, the pace of Japanese policy normalization may be more cautious.
Risks
- Central bank communication text is noisy, and LLM scoring may be affected by context, speaker style, and sparse samples.
- BoJ has less public communication after the conflict, so the sample basis for related conclusions is weaker than for the Fed and ECB.
- Geopolitical events and policy shocks can rapidly alter central bank tone and market pricing.
- Multi-asset investing faces market risk, credit risk, interest rate risk and foreign exchange risk.
- Historical correlations may break down, especially in periods of high volatility, low liquidity, or macro dislocation.
- Options, structured derivatives, and futures are not suitable for all investors and carry elevated trading risk.
What to watch
- Whether Fed inflation wording continues to strengthen and whether growth and labor tone show a clear deterioration.
- Whether the hawkish-dovish divergence among Fed speakers such as Powell, Williams and Barr expands.
- Whether ECB’s hawkish tone continues to ease from its high, or remains elevated under inflation pressure.
- Whether comments from Schnabel, Makhlouf, Nagel, Rehn and Lagarde change the distribution within ECB.
- Whether BoJ reinstates stronger policy normalization signals, or continues with more cautious and balanced communication.
- The second-order impact of the Middle East conflict and other geopolitical events on inflation, growth and central bank reaction functions.
- Theme contribution changes after each daily LLM dashboard update, especially for inflation, growth, employment and interest rate themes.