Abstract
This study investigates the impact of monetary policy communication of the State Bank of Pakistan (SBP) on two different aspects. First, whether the information in Monetary Policy Statement (MPS) alters the way market analyzes the economy, using a text-mining approach. Second, whether the voting pattern disclosed in the Monetary Policy Committee (MPC) minutes provide market with some direction about the future path of the policy rate. The results show that the communication of monetary policy decisions changes the market sentiments in accordance with the information provided in the MPS. Moreover, we find that the voting record provided in the minutes of the MPC meetings guides the market about future path of interest rates. These findings support the effectiveness of SBP’s monetary policy communication, which is one of the requisites in implementation of the inflation targeting framework.