. ( 2008 ), “ central bank communication and monetary policy : a survey of theory and evidence ”, nber working paper 13932 consumers – is influenced more by their future expectations of interest rates, prices and incomes rather than just the current changes in these variables. accordingly, central banks offer forward guidance – both implicit and explicit – to manage expectations in the economy. thus, communication is an extremely potent component of the toolkit of modern central banks. 13. communication, however, is also a double - edged sword. during the global financial crisis, a coordinated response by the major central banks helped avert the worst effect of the crisis. mr. mario draghi ’ s declaration as the president of the european central bank to do “ whatever it takes ” to preserve the euro amidst the eurozone debt crisis of july 2012 boosted market sentiments. on the other hand, communication by the us fed during may 2013 on its future monetary policy path triggered the taper tantrum episode of heightened global financial market volatility as markets were caught off guard by the announcement. therefore, communication needs to be balanced and well - telegraphed to avoid unintended consequences. 14. the current global conditions, after about two years of living through the pandemic, are now posing complex challenges for central bank communication. a number of economies, including the major ones, are facing multi - decadal high inflation due to supply disruptions, tighter labour markets, fragility of the just in time inventory management and geopolitical disturbances. central banks are in a bind – if they act aggressively to contain inflation which may perhaps subside as normalcy returns, they run the risk of setting in recession ; on the other hand, if they act too little and too late, they may be blamed for “ falling behind the curve ” and may have to do a lot of catching up later which will be detrimental to growth. meanwhile, financial markets world over have turned extremely volatile as they have been left grappling with heightened uncertainty over the pace of future monetary policy normalisation. recent geo - political developments have further aggravated the challenges and dilemmas for the central banks. amidst these uncertainties, central banks have to find the optimal grounds with attendant communication challenges. our recent approach 15. at the reserve bank, we are mindful of the importance of communication given our multifarious responsibilities and wider ramifications of our actions. we have followed a consultative approach by periodically interacting with various stakeholders on policy formulation. this has

- day main vrrr auction so as to ensure that liquidity conditions “ evolve in sync with the macroeconomic developments to preserve financial stability ”. in the same spirit, g - sap operations were discontinued in october 2021 given “ the existing liquidity overhang, the absence of a need for additional borrowing for gst compensation and the expected expansion of liquidity in the system … ”. 23. as i proceed to conclude, let me briefly summarise how we have been different from other central banks in our pandemic response. first, we have undertaken unconventional measures even before exhausting the conventional policy space ; i. e., even before reaching the zero lower bound of interest rates. second, the counterparties involved in our operations were only banks and all india financial institutions ( aifis ) as liquidity provided to targeted sectors were channelised through them. third, we have confined our asset purchase programme to central and state government securities and have not diluted rbi ’ s collateral standards in our lending operations, unlike many other central banks. fourth, most of our measures were announced with pre - set terminal dates instead of being open - ended. this has reinforced the credibility of our announcements. fifth, while stating and in facilitating the ” evolution of the yield curve as a public good ”, we have solely operated in the secondary market unlike some inflation targeting eme central banks that made emergency provisions to operate in the primary market to finance the government directly. sixth and finally, we have continued with our accommodative stance based on our own domestic growth - inflation dynamics, amidst current divergence in policy actions of central banks across the world. thus, we have used the flexibility embedded in the fit framework and implemented our monetary policies, without compromising on our primary mandate of price stability. the raison d'etre of our actions, as i mentioned earlier, was communicated through speeches, post - policy press conferences and media interactions. concluding observations 24. let me conclude by saying that ‘ change ’ has been the only constant in the theory and practice of monetary policy. there is no last word yet on what constitutes the best practice of monetary policy. the conduct of monetary policy has undergone notable changes both in india and across the world as economies and markets evolved and policymakers gained greater insights into how economic agents interact in a complex economic system. 25. globally, the evolution of monetary policy has swung from being more directive and discretionary to a strict rule - based regime, before settling to