Chorus in the Cacophony: Dissent and Policy Communication of India’s Monetary Policy Committee

Second, using the consecutive MPC meetings of the Reserve Bank of India (RBI) we have constructed two measures of implicit dissent and investigated their influence on anchoring the growth and inflation forecasts of the country. [...] While the former has been calculated on a month-on-month basis, corresponding to the time period of our 1 Drawing motivation from the findings of a specific strand of literature which discuss how committee members tend to veil their actual stance (Ottaviani and Sørensen (2001)), we use the word implicit in order to highlight the presence of such tendencies among the MPC members as well. [...] For our purpose of deriving the dissent variable it is only necessary that the same convention is used in labelling the vote and the speech. [...] To the best of our knowledge, this paper has made 6 the first attempt at estimating the equations of the following form: Growtherrort = α1 + β1DIt−1 + γ1DGt−1 + ω1δOilshockt + ϕ1RepoRateDummyt (2) Inflationerrort = α2+β2DIt−1+γ2DGt−1+ω2δOilshockt+ϕ2RepoRateDummyt (3) The dependent variables in the above equations are absolute deviations of the forecaster’s prediction of the growth and inflation ra. [...] The coefficients of the dissent variable will capture the impact of dissent on the forecast error.