Monetary Policy Topic Extraction by Using LDA: Japanese Monetary Policy of the Second ABE Cabinet Term

In this paper, we will analyze monetary policy of the Bank of Japan, the central bank of Japan, under the second Abe Cabinet term which started in December 2012. The Bank set the "price stability target" at 2 percent in terms the year-on-year rate of change in the consumer price index in January 2013 and has made a commitment to achieving this target at the earliest possible time. The Abe Cabinet´s policy feature was monetary easing from the start. At the Monetary Policy Meeting held on October 31, 2014, the Bank decided monetary easing by accelerating the pace of increase in the monetary base and by increasing asset purchases and extending the average remaining maturity of Japanese government bond purchases. We analyzed the Monetary Policy Meeting minutes by text mining technologies. Especially we conducted a topic extraction using the Latent Dirichlet Allocation model from the Meeting minutes from January 2013 to June 2014. The extracted topics clearly showed their monetary easing policies. In addition, we found that a topic corresponding to the consumption tax hike held on April first, 2014 of which topic ratio increased in the last of 2013.