Reserve Bank of India (RBI) deputy- governor Michael Patra has said that communication from central banks globally have evolved over the past few years and that they must engage in constantly refining and upgrading this “soft skill’’.
The RBI deputy-governor, who has resisted calls for an interest rate cut due to food inflationary pressures, made this remark at the “High-Level Policy Conference of Central Banks in the Global South” organised by the RBI as part of commemoration of its 90th year.
Earlier this week, Patra had co-authored an article in the RBI’s November bulletin, which said if inflation is not controlled, it can affect the real economy, particularly industry and exports.
The RBI’s monetary policy committee (MPC) is slated to meet from December 4-6 where it is largely expected to retain the policy repo rate after retail inflation hit a 14-month high.
Recently, union commerce minister Piyush Goyal and finance minister Nirmala Sitharaman had called for lower interest rates in what is seen as a nudge to the central bank to lower borrowing costs.
Patra said at the event that while communication is seen as a bridge between confusion and clarity, the RBI’s monetary policy communication strategy is constantly evolving as it balances the diverse and strident demands of country-specific stakeholders with global best practices.
He added that there are layers in its communication strategy which are shaped and nuanced by when, what, who, how and how much to communicate.
“Information on the objectives, policy framework, decision making, instruments and processes designed for the general public is updated and put out on the RBI’s website, with links to key policy rates, statements, transcripts of press conferences and minutes of monetary policy committee meetings.
“Assessments based on a text-mining approach indicate that the degree of transparency has been progressively enhanced, especially after the adoption of the flexible inflation targeting (FIT) framework’’.
As per the FIT framework, the RBI has been mandated to achieve a inflation target of 4 per cent with a band of two percentage points on either side.
