Necktie-nomics: What RBI Governor's Tie Colour Hints About Repo Rate Direction

Monetary policy decisions are typically guided by inflation data, growth forecasts and central bank models. But what if there were other, more visual clues? The latest research note from SBI has offered a rare and humorous diversion: could the RBI Governor’s choice of necktie colour reveal clues about interest rate decisions?

In a lighter section of its report titled The Monetary Multiverse, SBI Research delves into what it calls “necktie-nomics”—an imaginative take on decoding repo rate decisions based on the colour of the Governor’s tie during Monetary Policy Committee (MPC) announcements. 

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The ties were categorised into four tonal families—warm (reds, peach, coral, orange), cool (blue, aqua), dark (black, black with silver, dark blue), and mixed (yellow, purple). These were then mapped against historical rate decisions: hikes, holds, and cuts. To quantify the idea, SBI assigned numerical scores to policy actions and calculated something it calls the Tie Volatility and Tilt Index or TVTI. 

The conclusions are surprisingly playful. Warm tones appear mildly hawkish, often coinciding with rate hikes. Cool tones are associated with status quo outcomes. Dark ties, according to the report, signal decisiveness rather than direction used during moments like the recent jumbo 50 bps rate cut. Mixed colours offer the least predictability, matching their name. 

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While the author of the report notes that the analysis is meant to be taken “with a pinch of sugar,” the report does open a window into how even non-verbal cues can shape expectations. It also uses text-mining to decode central bank language and runs a counterfactual analysis imagining how U.S. Fed policy might have looked under Donald Trump, complete with a “Trump Attention Score.” 

While no one’s suggesting ditching CPI charts just yet, come next policy day, it might be worth watching not just the RBI Governor’s speech but also his tie.