UBS Economics-Global Economics Strategy _Deep Speak Warsh vs Waller_ Am...-119399225

ab22 December 2025Global ResearchPowered byUBS Evidence LabYESGlobal Economics & Strategy Deep Speak: Warsh vs WallerA new LLM-based tracker of central bank sentiment and thematic focusWe developed an AI-based approach to measure the policy tone for the Fed, ECB, and BoJ. Using LLMs, we analyze policy-relevant remarks in speeches, interviews and press conferences, and score them on a hawkish/dovish scale, offering insights into sentiment shifts as well as the themes that drive them, and individual speakers' contributions. Updated daily, the dataset spans over two decades and is accessible via an interactive dashboard and a Python API (>Access Dataset). Warsh vs Waller: what Fed-era language reveals about reaction functions Kevin Warsh and Christopher Waller reportedly remain in contention to succeed Jay Powell as the next Fed Chair. Because both have served as members of the Board of Governors of the Federal Reserve System, we can use DeepSpeak to evaluate their policy communications, drawing on their official speeches. Kevin Warsh served as a Governor from February 24, 2006 to March 31, 2011. Governor Waller joined the Board on December 18, 2020. Given the very different historical contexts in which they served - Warsh during the Financial Crisis and the emergence of unconventional policy, Waller during the post-pandemic inflation cycle - we focus on the within-cycle positioning relative to their contemporaries on the Board, rather than a direct comparison of their stances. Warsh's Board-era language relatively hawkish amidst institutional concernsExcept for late 2008, during the height of the crisis, Warsh's tone was persistently more hawkish than the median Board member throughout his tenure (Figure 2Warsh's policy tone diverged persistently from the Board and Figure 4Warsh structuraly more hawkish than the Board). His 2009-10 speeches consistently emphasized the risk of allowing emergency measures to harden into permanent policy. He highlighted the importance of preserving credibility, and independence, which features as a top topic in our narrative analysis in Figure 8Warsh's language emphasized institutional and policy boundaries. Notably, Warsh's hawkish bias referred more to the balance sheet than the federal funds rate (Figure 6Warsh hawkish bias was stronger on the balance shet than interest rates), which he treated as separate tools. The progression of model-identified central messages over time suggests a preference for re-establishing policy constraints as soon as tail risks recede, reflecting less concern over near-tem macro stabilization and more concern over long-term institutional drift (Figure 10What Warsh actualy said, at the time).Waller's communication looks state-dependent with a late-cycle dovish pivotBy contrast, Waller's communication is markedly more state-dependent. He turns decisively hawkish during the inflation surge, broadly in line with the Board, but his language pivots materially as inflation eas