Monetary policy: RBI should specify its inflation metric

Abstract

Though the economy is weak, underlying inflation is still too high to warrant a rate cut. Today is the much awaited credit policy day. With continuing weakness in the economy, and a steep drop in CPI and WPI inflation in recent months, the chorus for a rate cut has intensified. Recent statements by the finance minister about a rate cut can only add pressure on the Reserve Bank of India (RBI) to heed this chorus.

Against this backdrop, the question is whether RBI will cut the repo rate from 8%? Going by a poll of money market experts in a newspaper last Monday, the unanimous response was ‘no’. However, one can never tell, and I am not in the business of forecasting what RBI will do. Read more at: https://www.financialexpress.com/opinion/monetary-policy-rbi-should-specify-its-inflation-metric/14654/