Inflation risks

RBI should give a near-term road map for policy normalisation

Most economists do not expect the Monetary Policy Committee (MPC) to change either the policy rate or the stance on Friday, but will keenly watch the commentary accompanying the decision. The inflation rate, based on the consumer price index, has been running above the tolerance band of the Reserve Bank of India (RBI). The stated position of the central bank — like some of its peers in advanced economies — is that higher inflation is transitory. It has noted that supply-side disruptions, owing to the pandemic-related restrictions, higher margins and taxes are driving inflation. The central bank is focused on