The Reserve Bank of India (RBI) will unveil its third quarter monetary policy review on Friday amid accelerating inflation as the economy recovers from the slowdown set off by the global slump. That revival has been sparked by three government stimulus packages worth Rs2.48 trillion and monetary policy action by the central bank, which cut its policy rate to 3.25% from the pre-crisis 9% and pared the cash reserve ratio (CRR), infusing Rs1.6 trillion of liquidity into the system. While most economists and bankers expect a rise in CRR, some expect a hike in policy rates as well. Governor D. Subbarao has said before that RBI would have to resort to monetary tightening if food prices continue to rise. Here’s a look at what Subbarao and his team will consider while drawing up the policy.
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Graphics by Ahmed Raza Khan / Mint