THE NATURE OF MONETARY POLICY COMMUNICATION FOR A SMALL OPEN ECONOMY - THE CASE OF THE CENTRAL BANK OF MALAYSIA
DOI:
https://doi.org/10.33736/ijbs.14457.2026Keywords:
Bank Negara Malaysia, Co-occurrence analysis, Latent Dirichlet Allocation, Monetary Policy Statement, Term Frequency-Inverse Document FrequencyAbstract
This paper deploys text analysis techniques to explore the nature of 134 MPS released by BNM between May 2004 and July 2025, a topic that has not been examined before. The word cloud presentation suggests that topics such as economic growth, price levels, and economic development, both domestically and globally, are frequently discussed, which aligns with the Term Frequency-Inverse Document Frequency (TF-IDF) analysis. The Latent Dirichlet Allocation (LDA) analysis outlines five topics covering the real economy, prices and financial markets, with Topic 2 (general price trend) receiving the most coverage over 87 months (May 20024-July 2011). Finally, the co-occurrence analysis reveals that monetary policy is primarily discussed in the context of the real sector of the economy, rather than inflation and prices, likely due to semantic content. The MPS coverage aligns with the BNM’s role by emphasising the real sector and price levels, especially on global fronts. It is recommended that BNM redesign its communications to explicitly link the MPS to the price levels and consider additional channels for information dissemination.
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