ab 21 January 2026 Powered by YES UBS Evidence Lab Global Research Global Economics & Strategy Deep Speak: An AI-driven read on tone shifts at the Fed, ECB and BoJ A new LLM-based tracker of central bank sentiment and thematic focus We developed an AI-based approach to measure policy tone for the Fed, ECB, and BoJ. Using LLMs, we analyze policy-relevant remarks in speeches, interviews and press conferences and score them on a hawkish/dovish scale, offering insights into sentiment shifts as well as thematic ...

Group 1 - The Federal Reserve is expected to adopt a more hawkish stance, with discussions around potential interest rate hikes next year gaining traction in the market [1][2] - European growth is projected to be lower next year compared to this year, with inflation in Europe at 2% and the U.S. at approximately 3% [3][6] - There is a concern about overheating the U.S. economy due to strong growth and persistent inflation driven by both supply and demand factors [4][5] Group 2 - The Bank of France is anticipated to raise its growth forecast, indicating a potential underestimation of growth in Europe next year [6] - Market expectations suggest broad stimulus in Europe, although the focus has been narrower, particularly on Germany [6]

Core Viewpoint - U.S. Treasury yields have decreased slightly, indicating that investors are preparing for the Federal Reserve's policy decision, with a significant likelihood of a rate cut. Group 1: Market Expectations - A 25-basis-point rate cut is anticipated with a 90% probability, highlighting strong market expectations ahead of the Fed's announcement [1] - Investors are particularly focused on the Fed's projections and comments from Chair Jerome Powell, which may influence future market movements [1] Group 2: Fed's Stance - The Federal Reserve is expected to adopt a cautious tone while incorporating some hawkish elements to maintain policy flexibility, as noted by MFS Investment Management [2]