Measuring Communication Quality in the Bank of Israel's Interest Rate Announcements
This box makes use of text-mining tools to measure the quality of the Bank of Israel's communications with the public. It focuses on the Bank's interest rate announcements in English that were published between 2007 and 2018. We examine the text's accessibility to its readers, meaning how easy the text is to read. We also conduct a sentiment analysis to examine the message that the announcements try to communicate and their economic content. As expected, the analysis shows that the Bank of Israel's announcements are understandable mainly to readers with post-secondary education, but that even so, they are more accessible than the announcements by the Federal Reserve and the European Central Bank. The analysis further shows that the sentiment reflected in the text of the announcements is consistent with certain characteristics of the economy. In particular, we provide preliminary evidence of a correlation between the uncertainty reflected in the text and the VIX index of volatility in the domestic markets.