scholarly journals Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach

SAGE Open ◽  
2021 ◽  
Vol 11 (3) ◽  
pp. 215824402110338
Author(s):  
Amrendra Pandey ◽  
Jagadish Shettigar ◽  
Amarnath Bose
Keyword(s):  
Monetary Policy ◽  
Policy Framework ◽  
Inflation Forecasts ◽  
Inflation Forecasting ◽  
Monetary Policy Committee ◽  
Reserve Bank ◽  
Governance Practices ◽  
Policy Statements ◽  
Research Findings ◽  
Reserve Bank Of India

This study attempts to evaluate the monetary policy of the Reserve Bank of India (RBI) based on an investigation of the policy statements. The analysis based on text mining of the central bank’s monetary policy statements seeks to unravel the information considered by the central bank and the processes followed in making its inflation forecasts. The findings indicate that although the RBI examined high-frequency economic indicators, its inflation forecasts have generally been off the mark. Specifically, the monetary policy committee failed to foresee the sharp disinflation that followed the demonetization announced on November 8, 2016. This failure resulted in a high real interest rate regime that dealt a blow to the economy staggering under the effects of demonetization. Our research findings show that the monetary policy governance practices need to be refined and better aligned to economic realities, particularly under the RBI’s new monetary policy framework.

scholarly journals Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach

2020 ◽  
Author(s):  
Amrendra Pandey ◽  
Jagadish Shettigar ◽  
Amarnath Bose
Keyword(s):  
Monetary Policy ◽  
Policy Framework ◽  
Quantitative Methodology ◽  
Inflation Forecasts ◽  
Inflation Forecasting ◽  
Monetary Policy Committee ◽  
Reserve Bank ◽  
Policy Statements ◽  
Economic Reality ◽  
Reserve Bank Of India

<div><div><div><p>This study is an attempt to evaluate and interpret the monetary policy statements (MPS) of the Reserve Bank of India (RBI) for the five year period since it started conducting monetary policy meetings every alter- nate month. An important contribution of this paper is the evaluation of the inflation forecasting path of the RBI using information from the state- ments. Both qualitative and quantitative methodology has been adopted to study and evaluate the MPS. It helps in understanding processes fol- lowed and information considered while making inflation forecasts. The results clearly indicate that though the RBI examined the high frequency economic indicators in their process of assessment and inflation forecast- ing, their inflation forecasts have been below the mark. Similarly, the monetary policy committee (MPC) could not predict the sharp disinfla- tion following demonetization on 8th November, 2016 resulting in higher real interest rate regime. This shows that the monetary policy governance under the new monetary policy framework of the RBI needs to be revisited to align it with the economic reality of India.</p></div></div></div>

scholarly journals Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach

2020 ◽  
Author(s):  
Amrendra Pandey ◽  
Jagadish Shettigar ◽  
Amarnath Bose
Keyword(s):  
Monetary Policy ◽  
Policy Framework ◽  
Quantitative Methodology ◽  
Inflation Forecasts ◽  
Inflation Forecasting ◽  
Monetary Policy Committee ◽  
Reserve Bank ◽  
Policy Statements ◽  
Economic Reality ◽  
Reserve Bank Of India

<div><div><div><p>This study is an attempt to evaluate and interpret the monetary policy statements (MPS) of the Reserve Bank of India (RBI) for the five year period since it started conducting monetary policy meetings every alter- nate month. An important contribution of this paper is the evaluation of the inflation forecasting path of the RBI using information from the state- ments. Both qualitative and quantitative methodology has been adopted to study and evaluate the MPS. It helps in understanding processes fol- lowed and information considered while making inflation forecasts. The results clearly indicate that though the RBI examined the high frequency economic indicators in their process of assessment and inflation forecast- ing, their inflation forecasts have been below the mark. Similarly, the monetary policy committee (MPC) could not predict the sharp disinfla- tion following demonetization on 8th November, 2016 resulting in higher real interest rate regime. This shows that the monetary policy governance under the new monetary policy framework of the RBI needs to be revisited to align it with the economic reality of India.</p></div></div></div>

Central Bank Communications and Professional Forecasts: Evidence From India

2021 ◽  
pp. 097265272110440
Author(s):  
Ashima Goyal ◽  
Prashant Parab
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Jel Classification ◽  
Inflation Expectations ◽  
Speed Of Adjustment ◽  
Inflation Forecasts ◽  
Monetary Policy Committee ◽  
Reserve Bank ◽  
Policy Statements ◽  
Repo Rate

We analyze the influence of qualitative and quantitative communications of the Reserve Bank of India (RBI) on inflation expectations of professional forecasters and draw out implications for policy. Estimating Carroll-type epidemiological models of expectation formation under information rigidities, we get a large speed of adjustment of professional forecasters’ expectations. Analysis of the determinants of inflation forecasts, inflation surprises, and forecaster disagreement reveals significant influence of quantitative RBI communications in the form of inflation projections. This effect is prominent for shorter-horizon forecasts and after adoption of flexible inflation targeting. Macroeconomic fundamentals like lagged inflation and repo rate also significantly influence inflation forecasts. Choice of words in the RBI monetary policy statements has more impact after October 2016, when the monetary policy committee became the decision-making body. JEL Classification: E31, E52, E58

scholarly journals Monetary policy transparency and financial market forecasts in South Africa

2008 ◽  
Vol 2 (1) ◽  
pp. 31-56 ◽  
Author(s):  
Vivek Arora
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Empirical Work ◽  
Economic Benefits ◽  
Cross Sectional ◽  
Inflation Forecasts ◽  
Reserve Bank ◽  
Monetary Policy Transparency

The transparency of monetary policy in South Africa has increased substantially since the end of the 1990s. But little empirical work has been done to examine the economic benefits of the increased transparency. This paper shows that, in recent years, South African private sector forecasters have become better able to forecast interest rates, are less surprised by reserve bank policy announcements, and are less diverse in the cross-sectional variety of their interest rate forecasts. In addition, there is some evidence that the accuracy of inflation forecasts has increased. The improvements in interest rate and inflation forecasts have exceeded those in real output forecasts, suggesting that increases in monetary policy transparency are likely to have played a role.

scholarly journals Causality Analysis of South Africa Reserve Bank’s Monetary Policy Statements and Communication

2021 ◽  
Vol 10 (4) ◽  
pp. 55-74
Author(s):  
Arnold Segawa
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
Granger Causality ◽  
Grade Level ◽  
Causality Analysis ◽  
Flesch Reading Ease ◽  
Monetary Policy Committee ◽  
Policy Statements ◽  
Ease Score ◽  
Newspaper Articles

This paper inspects whether the South Africa Reserve Bank’s (SARB) Monetary Policy Committee (MPC) statements trigger have a causality with newspaper reports from the Mail and Guardian between 2010 and 2021. The study examines whether SARB’s post MPC statements’ readability is reciprocated in the subsequent Mail and Guardian newspaper articles. Using the Flesch Reading Ease Score and Flesch-Kincaid Grade Level score as the methodology, there is a systematic unpacking of both SARB’s MPC statements and newspaper reports from the Mail and Guardian which yield a dataset which is subsequently used to create a computation. This computation is then used to examine whether SARB’s MPC statements Granger cause the subsequent Mail and Guardian newspaper articles. Resultantly, the results show that there is no Granger causality between the SARB’s MPC statements and the Mail and Guardian’s Flesch Reading Ease Score and Flesch-Kincaid Grade Level score.

The Monetary Policy of the Reserve Bank of India.

1949 ◽  
Vol 59 (235) ◽  
pp. 436
Author(s):  
Cecil Kisch ◽  
K. N. Raj
Keyword(s):  
Monetary Policy ◽  
Reserve Bank ◽  
Reserve Bank Of India
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