RBI monetary policy: A fine balance between growth and inflation
Even as RBI is likely to hold rates, MPC members will sound extremely cautious and chart out the risks on the inflation front
Anticipating an upswing in inflation, led by oil prices, the Reserve Bank of India (RBI) changed its monetary policy stance from accommodative to neutral in February 2017. Given the uptick seen in inflation, it was a prudent decision. A bigger challenge for RBI will be navigating through the next financial year. Higher yields, inflation and election cycle in the US and India are likely to lead to an increase in financial volatility in global and Indian asset markets and make RBI’s task increasingly difficult.