Letters: RBIspeak

Apropos Rajeev Malik’s article “Sudoku for RBI” (October 11), I do not agree with the author when he says “…when it comes to central banks, effective but less frequent communication is always better than more frequent but less effective communication.” The frequency and the text of policy approaches and interpretations of the central bank depend on the frequency of happenings in the economy and the audience addressed, respectively. Thus, in the context of the European crisis, we read almost every day the announcements of several central bank authorities in the euro area on the latest turn of events.

RBI’s communication policy has improved a lot over the years, avoiding jargon as far as possible. Only a small proportion of its statements in the form of press releases, the speeches of the executives and so on are of interest to the aam admi. He is concerned about inflation and the action taken by RBI to control it as also the credit policy. The rest of the material is technical and meant for experts, market men, bankers, government officials, et al. So far, I have seen in the editorials of the financial press only appreciation of the clarity in RBI statements. This is in contrast to Greenspanspeak that was noted for “constructive ambiguity”. Once Greenspan, the then chairman of the US Fed, told a Congressional Committee meeting: “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.”

A Seshan, Mumbai

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