These are times when Central Bankers across advanced economies are finding it difficult to avoid polarization of opinion on the merits of their policy paths. The Reserve Bank of India (RBI)’s Governor though has received an almost unequivocal endorsement from both domestic (with some exceptions) and international stakeholders on the bitter medicine he has prescribed to control India’s inflation problem. Notwithstanding charges that his tough position has dampened economic activity, Dr. Rajan has stuck to the orthodox stance of Central Banks being primarily responsible for maintaining price stability.
Inflation’s Downward Path
Among the RBI’s major achievements over the last two years is the moderation in India’s retail inflation rate. Numbers suggest that despite short-term volatility, inflation data points across all the constituent sub-groups, viz. Food and Beverages (and tobacco), Fuel and Light, Housing, Clothing and Footwear, and other Miscellaneous items point towards a downward …
Inflation’s Downward Path
Among the RBI’s major achievements over the last two years is the moderation in India’s retail inflation rate. Numbers suggest that despite short-term volatility, inflation data points across all the constituent sub-groups, viz. Food and Beverages (and tobacco), Fuel and Light, Housing, Clothing and Footwear, and other Miscellaneous items point towards a downward …