Readability and Sentiment Analysis of Central Bank Communication in Central and Eastern Europe

Abstract

This study analyzes the readability and sentiment of central bank communications across six Central and Eastern European countries. It reveals considerable variability in readability, with Moldova being the most accessible and Serbia the most complex. Notably, readability declined during the 2020 COVID-19 pandemic, reflecting the urgent and complex nature of economic communication. The study finds no direct correlation between readability and sentiment; however, the net hawkishness index significantly correlates with business cycle phases, suggesting its potential to forecast monetary policy shifts. This study underscores the intricate relationship between central bank communication, readability, sentiment, and economic conditions, advocating for enhanced clarity in central bank communication. It also highlights the importance of domain-specific sentiment analysis for interpreting and predicting the implications of monetary policy communication, providing valuable insights for policymakers and market participants.