The Hindu Business Line : The silence of the lambs

New Delhi, Nov. 23 Financial sector experts are wondering if there been a change in the Reserve Bank’s communications policy. This is because its top officials – the Governor and the Deputy Governors – are now making fewer speeches.

In 2008, so far they have made only 27 speeches, compared with 48 in 2007. Under Dr Y.V. Reddy’s stewardship, such speeches had emerged as a major channel of communication, especially with the markets.

During his five-year tenure, the top five delivered over 218 speeches. As the accompanying table shows, of the 24 speeches made by the top five in 2008, only 3 were made after July.

Delivering the keynote address at a seminar on Central Bank Communications sponsored by the IMF in Mumbai in January 2006, Dr Reddy had said that central banks had started communicating more because they had to.

“There is an assumption that well-informed market participants would enable, if not assure, an improved functioning of the markets, and a central bank is in the best position to provide such useful information,” Dr Reddy had said.

Central bank communication strategies had acquired special importance in their armoury ever since the US Fed, under Mr Alan Greenspan, decided that this was a good way of ensuring a smooth functioning of the markets.

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