When BOJ head honcho Kuroda announced negative interest rates last week he messed up the algos, big time

The Wall Street Journal report on how Kuroda messed up text-reading algos at Nomura & Credit Suisse:

  • Both created artificial intelligence (AI) programs to analyze BOJ statements for clues to possible shifts in monetary policy
  • Using a text mining process on central bank statements and economic assessments
  • They count words and phrases such as "weakening inflation expectations" or "rising prices" and use their findings to create an index measuring BOJ "sentiment."
  • Analysts then consult the index readings as they consider the chances of the central bank acting to help the economy

For last week's meeting:

  • Both indexes gave little indication ... that additional monetary easing was necessary

Both firms are now revamping the algos

(I think experienced traders would refer to the revamp as 'back-fitting' ... but maybe I am too cynical :-D )

Article is here, may be gated.

At the next meeting Kuroda is going to pop up outta a big cake ... Surprise!