Ideas of India Karthik Narayan on Measuring the Effects of Unscheduled vs. Scheduled Monetary Policy Announcements
Nov 6, 2025
Karthik Narayan, a doctoral candidate in economics at the University of Oxford, dives into the intricacies of monetary policy in India. He discusses the challenges of measuring the impact of scheduled versus unscheduled policy announcements on interest rates and inflation. Karthik explains how unexpected changes can complicate economic forecasting and the relevance of the Lucas Critique. He emphasizes the importance of credible monetary policy and suggests frequent reviews to improve outcomes, while also touching on the evolving landscape since India's economic liberalization.
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Causality Is Hard In Monetary Policy
- Estimating causal effects of monetary policy is hard because central banks react to past, present and expected future conditions.
- Using raw policy rate regressions confounds cause and effect, so we need surprise-based identification.
Scheduled Versus Unscheduled Distinction
- Scheduled announcements are the MPC's preannounced policy reviews, while unscheduled ones occur outside the cycle.
- Unscheduled moves often respond to acute events and can be simultaneously driven by other news.
RBI's Emergency COVID-19 Meeting Example
- Karthik cites the emergency 27 March 2020 RBI meeting as an unscheduled example during COVID-19.
- That meeting delivered large, unanticipated interest rate and liquidity actions.