How RBI missed the inflation surge

The RBI did most of the heavy-lifting in the initial phase of the pandemic but was slow in unwinding the policy accommodation as economic reality changed


Rajesh Kumar
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will meet next week for the first time since increasing the policy repo rate by 40 basis points after an off-cycle meeting on May 4. Given the inflation condition, another rate hike is said to be a “no-brainer”. Financial markets are expecting the rate-setting committee to increase the policy rates by 50 basis points next week. A rapid rise in consumer price levels is forcing central banks across the world to withdraw monetary accommodation and increase interest rates. Higher inflation has become the primary policy challenge. The urgency to contain inflation has increased in India as well and an off-cycle meeting to increase the policy rate underscored that
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

First Published: Jun 01 2022 | 11:22 PM IST

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