Photo: ReutersIndia’s infant monetary policy committee (MPC) has already made history: In just three bi-monthly reviews beginning October, it has acted upon three different inflation assessments. Not a single living entity anywhere in the world expected a shift in the policy stance in February. The latest MPC minutes are also perplexing in some ways though the renewed commitment to the 4% target is welcome. Finally, there is a missing focus on the adverse implications for monetary policy from the elusive investment recovery contributing to lowering the potential output while fiscal policy boosts consumption. This will affect how quickly the output gap closes, which in turn will affect the ability to achieve the ambitious inflation target of 4%.

Source: Mint March 01, 2017 23:03 UTC