In its life of a little over three years, the Reserve Bank of India’s monetary policy committee (MPC) is perhaps navigating through the toughest period. “Monetary policy has headroom to respond to the evolving macroeconomic configuration, but a good fix is needed on the shape of the inflation hump it has chosen to look through," said Patra. Indeed, headline retail inflation rose to 7.35% in December, far higher than what RBI had anticipated in previous policy statements. Long-standing hawk Chetan Ghate took comfort from the fact that inflation expectations were lower and that softer core inflation could give RBI room to cut rates. Dholakia received support from an unlikely corner, that of Patra on monetary policy stimulus.

Source: Mint February 20, 2020 13:35 UTC