ECB monetary policy analysis based on the facial expression analysis of the ECB presidents

Abstract

The European Central Bank (ECB) decides the euro area's monetary policy at the monetary policy meeting of the Government Council. After the ECB's monetary policy meeting, the ECB president Mario Draghi and the vice-president Vitor Constancio hold a press conference to explain the monetary policy management. In this research, using facial expression recognition algorithms based on deep learning, we analyzed the presidents' facial expression in the press conference and estimated the emotional indexes such as "Happiness", "Anger", "Sadness" and "Surprise". As a result, we found that the president Draghi's index of "Happiness" decreased and the index of "Sadness" increased just before making major policy changes in the phase of ECB policy normalization. In addition, the vice-president Vitor Constancio's index of "Happiness" tends to change in the opposite direction to Draghi's index of "Happiness" regardless of the policy change. We believe that the inverse correlation may have the adjustment effect that the impression of the whole press conference will be neutral.