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A textual analysis of central bank communication the case of Indonesia

Haryo Kuncoro (), Gatot Ahmad () and Dianta Sebayang ()
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Haryo Kuncoro: Faculty of Economics, State University of Jakarta
Gatot Ahmad: Faculty of Economics, State University of Jakarta
Dianta Sebayang: Faculty of Economics, State University of Jakarta

Economics Bulletin, 2021, vol. 41, issue 3, 2158-2172

Abstract: The objective of this paper is two-fold: (1) to assess the textual aspects of the Central Bank of Indonesia's monetary policy communication and (2) identify their potential relation to the inflation expectations. Using monthly policy interest rate press release announcements, we found that the text readability is relatively stable, although the text complexity is higher. However, the clarity and readability of the text are negatively correlated with the inflation expectations. Meanwhile, the tone of the text is positively associated with the inflation expectations. They suggest that the central bank should strengthen the quality of the text announced and pay more attention to the informal communication channels. The high quality and use of informal communication channels provide additional pieces of information in shaping price expectations in the future.

Keywords: Central Bank Communication; Text Mining; Monetary Policy; Inflation Expectations (search for similar items in EconPapers)
JEL-codes: E3 E5 (search for similar items in EconPapers)
Date: 2021-09-18
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