Central Bank Communication in Ghana: Insights from a Text Mining Analysis

Abstract

Effective central bank communication is useful for anchoring market expectations and enhancing macroeconomic stability. In this paper, the communication strategy of the Bank of Ghana (BOG) is analysed using BOG's monetary policy committee press releases for the period 2018-2019. Specifically, we apply text mining techniques to investigate the readability, sentiments and hidden topics of the policy documents. Our results provide evidence of increased central bank communication during the sample period, implying improved monetary policy transparency. Also, the computed Coleman and Liau (1975) readability index shows that the word and sentence structures of the press releases have become less complex, indicating increased readability. Furthermore, we find an average monetary policy net sentiment score of 3.9 per cent. This means that the monetary policy committee expressed positive sentiments regarding policy and macroeconomic outlooks during the period. Finally, the estimated topic model reveals that the topic proportion for "monetary policy and inflation" was prominent in the year 2018 while concerns regarding exchange rate were strong in 2019. The paper recommends that in order to enhance monetary policy communication, the Bank of Ghana should continue to improve on the readability of the monetary policy press releases.

Inflation-Forecast Targeting: A New Framework for Monetary Policy?

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A Text Mining Analysis of Central Bank Monetary Policy Communication in Nigeria

“…The FOMC's communication strategy involves issuing a policy statement after each meeting while the minutes of the meetings are released to the public three weeks after the policy decision date. Similar monetary policy communication strategies are in place in several other central banks around the world, including the Bank of England, Bank of Japan, Bank of In line with the increased level of communication among central banks, a new but growing body of literature has focused on the extraction of useful insights from monetary policy documents using different text mining techniques (see Shirota, 2015;Bruno, 2016;Kahveci and Odabas, 2016;Luangaram and Wongwachara, 2017;Oshima and Matsubayashi, 2018;Park et al, 2019;Shapiro and Wilson, 2019;Omotosho, 2020). According to Blinder et al (2008), different methods are available for the analysis of central bank communication; including the indirect approach (whereby financial market reactions to policy announcements are measured using event windows), and a direct approach (whereby the researcher provides a subjective assessment of central bank communication by manually reading through the policy document and coding its contents into numerical scales).…”

A Text Mining Analysis of Central Bank Monetary Policy Communication in Nigeria

“…So far, 127 MPC meetings have been held while the policy Communiques for meeting numbers 30 to 127 held during 2004 -2019 have been published. In line with the increased level of communication among central banks, a new but growing body of literature has focused on the extraction of useful insights from 3 monetary policy documents using different text mining techniques (see Shirota, 2015;Bruno, 2016;Kahveci and Odabas, 2016;Luangaram and Wongwachara, 2017;Oshima and Matsubayashi, 2018;Park et al, 2019;Shapiro and Wilson, 2019;Omotosho, 2020). According to Blinder et al (2008), different methods are available for the analysis of central bank communication; including the indirect approach (whereby financial market reactions to policy announcements are measured using event windows), and a direct approach (whereby the researcher provides a subjective assessment of central bank communication by manually reading through the policy document and coding its contents into numerical scales).…”