BackEconomic Survey: Is the monetary policy debate over?
The tone of the Economic Survey suggests that there will be greater consensus this year between the finance ministry and RBI on monetary policy
Premium
Is the monetary policy debate over for now? Chief economic adviser Arvind Subramanian said after the release of the new Economic Survey this week that the scope for monetary easing is now limited. Most expect inflation to rise in the coming months in tandem with the recovery in economic growth. Subramanian said that there was scope for lower interest rates over the past 18 months but they are now more consistent with the inflation outlook.
The monetary policy committee has had to face a lot of fire because of its firm refusal to cut interest rates when headline inflation was below target. What matters to a central bank with an inflation-control mandate is the trajectory of future inflation rather than what happened in the past. Many critics had even questioned the credibility of the inflation forecasts made by the Reserve Bank of India.
The economists in the finance ministry were among the many critics of Indian interest rate policy. The tone of the Economic Survey suggests that there will be greater consensus this year between the finance ministry and the central bank on monetary policy.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
