How to Read a Central Bank StatementSome background helps

The decision is usually already priced. What moves markets is the wording, and the wording changes in ways that are deliberate, small, and readable if you know where to look.

The decision is the least informative part

• By the time a statement is published, the decision itself is usually priced. Forward markets have been quoting the probability for weeks — see what is already implied with the priced-in-moves calculator.
• What moves markets is the difference between the statement and what was expected, which is almost never about the number.
• The four things that carry information: what changed in the wording, the vote split, the projections, and what the press conference adds or withdraws.

1. Read the diff, not the document

• Statements are edited, not rewritten. Comparing this one against the previous one word by word is the single highest-value technique, and most central banks make both available for exactly this purpose.
• Watch the qualifiers. "Will" versus "is likely to" versus "may" are three different commitments, and the change between them is deliberate.
• Watch removals. A sentence that disappears was removed by a committee that discussed removing it. Deletions carry as much information as additions and are easier to miss.
• Watch the conditionality. "If the data evolve as expected" attached to a guidance sentence converts a commitment into a forecast.

2. The vote split

• A unanimous decision and a narrow one are different signals about the next meeting, even when the decision is identical.
• Dissents in a direction are leading indicators of the committee's drift, particularly when the dissenter has previously been with the majority.
• Not all central banks publish votes, and those that do publish them on different timelines — some immediately, some with the minutes weeks later.
• Named dissents are stronger than anonymous counts. A known hawk dissenting is expected; a known dove dissenting hawkishly is news.

3. Projections and the dot-style forecast

• Projections are conditional forecasts, not commitments, and central banks say so explicitly and repeatedly.
• The market curve and the committee's own path frequently disagree, sometimes by a great deal. Neither is a forecast in the ordinary sense — the market curve is a hedgeable price containing a risk premium.
• A rule-based benchmark helps calibrate: the Taylor rule calculator shows what a mechanical rule would prescribe, which is useful precisely as a contrast to what the committee chose.

4. The balance sheet, which is a separate policy

• The rate and the balance sheet are two instruments, and they can move in opposite directions. A statement can be dovish on rates and hawkish on runoff.
• Reinvestment policy is the operative detail: whether maturing holdings are reinvested, partially reinvested, or allowed to run off determines the actual flow.
• Facility terms matter for funding markets even when the policy rate does not move — see money markets.

5. The press conference: where guidance gets given and taken away

• The prepared remarks are the statement expanded. The question session is where unscripted characterisation happens, and it moves markets more often than the statement does.
• Watch for a governor declining to repeat a phrase from the written statement. A refusal to reaffirm is a signal.
• "Data dependent" is not information. Every central bank is data dependent by definition; the phrase appears when the committee does not wish to commit.
• Meeting-by-meeting language means guidance has been withdrawn, which raises the volatility of every subsequent meeting.

What a statement never tells you

• What they will actually do. Committees change, data change, and any guidance is conditional on a forecast that will be revised.
• How markets will react. The reaction is to the surprise relative to expectations, and expectations are not published.
• What was actually argued. The minutes, published later, are closer — and are themselves an edited account.

The checklist

• What was already priced, before reading anything?
• What changed in the wording, word by word against the last one?
• What was removed?
• How did the vote split, and who moved?
• Which way were the projections revised, and does the committee's path agree with the market's?
• What did the press conference add, and what did it decline to repeat?