Text mining analysis of monetary policy statements of RBI

Monetary policy is a principal tool by which a country's reserve bank or financial regulatory authority influences the speed and direction of overall economic activity and general rate at which prices increase or decline. Post 2016, the official monetary policy is communicated through a statement issued by Reserve Bank of India, conveying the decision and current and future outlook of the Monetary Policy Committee. The current research aims to delve into assimilating available monetary policy statements of the Reserve Bank of India post the adoption of inflation targeting framework (2016-2020) with the objective of identifying the: 1) taxonomy related to the communications of the Reserve Bank of India via monetary policy statements; 2) degree of association between inflation targeting and topics identified through topic modelling; 3) cosine similarity between inflation targeting and identified topics. The analysis quantifies communications of the RBI using tools from computational linguistics.