The RBI issues monetary policy statements (MPS) along with policy decision announcements (Available Here). These statements contain forward-looking information on the policy path of RBI and their assessment of the economic outlook. We derive the tone of these statements leveraging textual analysis in Shrimali and Ahmad (2025). We extract the tone using dictionary-based measures.Â
The net-hawkishness tone index is calculated using a customised dictionary incorporating RBI's goals and language patterns (RBI Lexicon). This dictionary contains keywords related to the policy goals of the central bank along with the lists of hawkish and dovish language modifiers. The measure is constructed by searching for hawkish and dovish modifiers around the keywords in the window of five words. The positive value of the index indicates a hawkish (or restrictive) tone, whereas the negative value indicates a dovish (or accommodative) stance. The shaded region in the figure below shows the recession period. It is observed that tone is more accommodative (or dovish) during this period.