markets in its commentary that monetary policy is not, and cannot be, a one-way street. The outlook on inflation, in the words of the Reserve Bank of India (RBI) governor, was expected to be “benign" (minutes of May 2020 MPC meet). So monetary policy had to, perforce, take the lead. Monetary policy has reached its limits. But by ignoring the changed ground realities and its implications for the evolving growth-inflation mix in its commentary, it lost an invaluable opportunity to warn markets that monetary policy is not, and cannot be, a one-way street.

Source: Mint June 06, 2021 17:15 UTC