This weekend, let’s ditch the customary navel-gazing on the economy and markets, and consider an important topic broached by none other than Reserve Bank of India’s Deputy Governor Michael Patra. At the SBI Banking and Economics Conclave in Mumbai last week, Patra made a speech titled ‘The Lighter Side of Monetary Policy’. He said, “The theme of my talk is the humour that is an integral part of monetary policy making. This has not received attention either among economists or among the lay public.” With the next Monetary Policy Committee (MPC) meet to be held next week, the lay public would like to know how hilarious these meetings are.
The transcripts of the Federal Open Market Committee (FOMC) meetings show that a member’s statement is sometimes followed by the word [laughter] in square brackets, enabling serious research on humour in monetary policy. Patra refers to a research paper titled ‘What’s so funny about monetary policy?’ which finds that “a member elicits more laughter if he or she expects higher inflation, other things being equal”. That would suggest monetary policy committee meetings this year have been occasions for unbridled hilarity.
Unfortunately, the minutes of the MPC meetings in India make no reference to laughter, so we have no means of knowing whether their missing the inflation target led to members rolling on the floor laughing their guts out.