December 13, 2024

Bionpa

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The art and science of managing inflation

The art and science of managing inflation

The art and science of managing inflation



The conduct of monetary policy in India has been critiqued by economists in recent weeks. The following are some of the perceived lacunae. One, that there has been an unwarranted delay in shifting priority from supporting growth to controlling inflation. The latter is anyway the primary objective of the Monetary Policy Committee (MPC) given its mandate as a (flexible) inflation targeting institution. Two, that policy has been pursuing multiple objectives, in addition to balancing the inflation-growth trade-off, resulting in a loss of focus on the primary objective of price stability, preventing a timely response to persistently high inflation. As a corollary, a disconnect, even dissonance, has emerged between statements and actions, hindering clear communication and forward guidance to markets.



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First Published: Tue, June 28 2022. 00:30 IST

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