RBI emphasizes clear communication in monetary policy under flexible inflation targeting

The Reserve Bank of India (RBI) is focusing on clear communication in its monetary policy, following global standards. Deputy governor Michael Patra noted that the RBI does not provide specific forward guidance on inflation, unlike some other central banks. Research shows that the RBI's communication tone significantly affects market expectations, especially during periods of tightening monetary policy. The RBI has enhanced transparency since adopting flexible inflation targeting, balancing high- and low-frequency communication. Inflation has been a central topic in recent monetary policy discussions, particularly influenced by the geopolitical crisis in 2022. The RBI's communication practices have evolved to address changing economic conditions and uncertainties.