Central bank work on lowering prices in delicate balance
10 months ago

Central bank work on lowering prices in delicate balance

New Indian Express  

The Reserve Bank of India appears to be in its final leg of bringing inflation to heel. Though headline inflation is showing steady signs of easing, the central bank’s six-member Monetary Policy Committee is steadfast on retaining repo rate at 6.5 percent as any “premature move may undermine the success achieved so far”. As we navigate the ‘last mile’ of disinflation, the policy imperative is to ensure a durable decline in price rise and aligning not just headline, but also core inflation, to the 4 percent target. If declining global commodity prices and higher government capex are positive signs for growth, the government’s fiscal consolidation drive will help lower inflationary pressures and the evolving trajectory of current account deficit suggest that India is well placed in terms of macro-financial stability. That said, consumption demand revival holds the key in sustaining the current growth momentum, which in turn depends on falling unemployment and rising household income.

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