Central Banks' Communication Strategy and Content Analysis of Monetary Policy Statements: The Case of Fed, ECB and CBRT

Prior to the 1990s, it was believed that Central Banks should be in mystery giving away little on the policies they were following. However with time, the importance of transparency and working with, rather than against, markets began to be understood. This has become especially important after central banks began to implement inflation targeting regime and communication strategy has turned out to be a major tool for central banks. In this framework, central banks began to use different communication channels one of which is the monetary policy statements after policy decisions. Our work offers a semantic examination of monetary policy statements from the US Federal Reserve, the European Central Bank and the Central Bank of the Republic of Turkey (Fed, ECB and CBRT) in order to observe the change in tone of monetary policy statements with movements toward greater transparency. In the study, we examine the monetary policy statements of three central banks in the pre-crisis years of 2002 to the subsequent period of 2015 and compare the specifics of the language used both pre- and post-crisis by making use of Diction 7 software. The results show that optimistic tone of Fed has decreased over the period we studied while certainty tone has increased. As for ECB and CBRT, there is no significant tone difference in certainty, optimism and the realism over time. However, for the CBRT's last two years statements, there is a significant increase of optimistic tone.