Reading Between the Lines: Using LLMs to Forecast Market Moves After FED Central Bank Signals

Central bank speeches move markets. Always have. But now, you’ve got a new edge—Large Language Models (LLMs) can decode the Fed faster and more precisely than humans ever could.

You already know the stakes. A single shift in tone—from “moderately elevated” to “persistently high” inflation—can send equities plunging, push bond yields lower, or trigger a flight to the dollar. Traders have spent decades trying to read between the lines of policy statements. Now, LLMs are doing it better.

Why Central Bank Language Moves Markets

Markets don’t trade on today—they trade on expectations of what’s coming next. That makes central bank communication a battlefield for market sentiment.

But central bankers don’t speak plainly. They hedge. They caveat. They use dense, sometimes contradictory language by design. Traditional NLP methods—like word counts and sentiment dictionaries—flatten nuance and often miss what truly matters: the shift in context.