The AI model analyzed speeches from the U.S. Federal Reserve from the past 25 years to determine the nature of policy signals and gain a trading advantage.
Analysts at JPMorgan Chase & Co. have used a ChatGPT-based artificial intelligence (AI) model to analyze statements and speeches from the U.S. Federal Reserve in the past 25 years to determine the nature of policy signals. The outlook of the Federal Reserve has been rated on a scale that the financial services company is referring to as Hawk-Dove Score, Bloomberg reported.
Since the launch of OpenAI’s language model GPT 3 and the subsequent chatbot ChatGPT, businesses have invested in exploring other uses of AI technology. Interesting Engineering reported earlier this month how Bloomberg was also developing its own AI model for the financial markets, dubbed BloombergGPT.
JPMorgan Chase’s work is yet another tool being developed by Wall Street to gain an edge in trading by making use of available information to decipher the central bank’s intent and detect potential signals about upcoming policy changes.
How does the Hawk Dove score AI model work?
The development of the AI model comes at a time when the U.S. Federal Reserve has been aggressively tightening its monetary policy to rein in inflation in the country. With fears of an incoming recession as a result of the policy, investors and traders are keen to know when Fed will begin dropping its interest again.
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