Central banks are still refining their approach to communicate effectively with the public, and improving this ‘soft skill’ is important for enhancing their communication efforts, notes M. D. Patra, Deputy Governor of the RBI (Reserve Bank of India) on the theme of ‘Communicating Monetary Policy’ at the ‘High-Level Policy Conference of Central Banks in the Global South,’ organised by the RBI to celebrate its 90th year in Mumbai.
Patra emphasised that in recent years, focus has been placed on enhancing central bank communication through education, which includes pre-policy consultations with a range of stakeholders, such as analysts, economists, academics, banks, industry representatives and experts, followed by post-policy interactions to the broader public.
“The RBI has emphasised on clarity in communication, while maintaining a balance between both high and low frequency communication of monetary policy,” he mentioned.
Patra highlighted that the RBI regularly updates its website with information tailored for the general public, covering its objectives, policy framework, decision-making processes, instruments and key resources. This includes links to key policy rates, policy statements and monetary policy committee meetings. Text mining assessments reveal improvement in transparency, particularly since the adoption of the flexible inflation targeting (FIT) framework.
Survey-based findings reveal that inflation expectations have become more stable and align closely with actual inflation. This points to an increasing public understanding of monetary policy.
On the educational front, the RBI has been conducting competitions for education institutes, sponsoring short period internships for students and using social media platforms to educate the public about its role, with an aim to build trust and confidence in the public.
“…the Reserve Bank of India issues short and simplified press releases for an audience with limited financial literacy. Establishing links with the media, such as through background briefings, is another common tool,” he adds.
