The Indian central bank’s tendency to overestimate inflation has prevented it from cutting interest rates further and cost the economy, according to one of Prime Minister Narendra Modi’s advisors.
“Their view of the economy doesn’t seem to be correct,” and by keeping rates high, they “have imposed a high output sacrifice,” said Ashima Goyal (pictured), a member of Prime Minister’s Economic Advisory Council. “They believe inflation will rise, but you know their predictions of inflation have always been overestimated.”
The six-member monetary policy committee’s (MPC’s) two-day meeting to decide on policy rates will start on Tuesday.
While the central bank’s
