Evaluation of the Inflation Forecasting Process of the Reserve Bank of India: A Text Analysis Approach

This study attempts to evaluate the monetary policy of Reserve Bank India (RBI) based on an investigation statements. The analysis text mining central bank’s statements seeks unravel information considered by bank and processes followed in making its inflation forecasts. findings indicate that although RBI examined high-frequency economic indicators, forecasts have generally been off mark. Specifically, committee failed foresee sharp disinflation demonetization announced November 8, 2016. failure resulted a high real interest rate regime dealt blow economy staggering under effects demonetization. Our research show governance practices need be refined better aligned realities, particularly RBI’s new framework.