In Kuroda’s face: Researchers find ways to predict central bank changes

TOKYO: For decades, economists have tried to guess central bank policy direction by studying subtle changes in official language – now, researchers are finding new clues on policy, not in the words of central banker but in their faces.

In Japan, two artificial intelligence researchers, one from Nomura Securities and the other from Microsoft , are using software to analyse split- second changes in the facial expressions of Bank of Japan Governor Haruhiko Kuroda at his post-meeting press conferences.

Their study found that Kuroda showed fleeting signs of ‘anger’ and ‘ disgust’ at news conferences that preceded two recent major policy changes – the January 2016 introduction of negative interest rates and the adoption of the so- called ‘yield curve control’ policy September last year.

The implication is that Kuroda was beginning to sense the constraints of existing policies about six or seven weeks before the central bank’s board actually decided to change them, the researchers concluded.

The research was presented last weekend to a subcommittee meeting of the Japanese Society for Artificial Intelligence (JSAI).

At press briefings that took place immediately after the changes were announced, Kuroda’s face registered less ‘ sadness’, they found.

This could become a powerful tool in predicting policy changes, said Yoshiyuki Suimon, a researcher at Nomura’s Financial & Economic Research Centre and the lead author of the study.

“We’d like to analyse (Fed chair Janet) Yellen and ( ECB Gov. Mario) Draghi next,” Suimon said.

Suimon and Daichi Isami, a Microsoft researcher, had studied together at the University of Tokyo’s Graduate School of Frontier Sciences and came up with this idea around the beginning of this year.

Working on their own time, the pair took screenshots of Kuroda’s face every half-second from video footage. — Reuters