Monetary policy path

Central bank may not cut rate in the near term

The four-year term of the three external members of the monetary policy committee (MPC) ends at a critical juncture, with inflation above the upper end of the target band. The minutes of the August meeting, released last week, indicated that the central bank might not be in a position to extend further support through rate cuts at a time when the Indian economy is expected to witness “its deepest contraction in history”. Inflation based on the consumer price index (CPI) inched up further in July to 6.93 per cent, compared to 6.23 per cent in the previous month. The expectation