Risks remain

Monetary policy committee has good reason to stay cautious

The monetary policy committee, or MPC, of the Reserve Bank of India (RBI) will meet on April 5 and 6 for its bi-monthly review of monetary policy. After its last review meeting, on February 8, the MPC surprised markets by keeping the policy interest rates steady at 6.25 per cent, saying that it was awaiting clarity on the impact of demonetisation on India’s growth momentum and the inflation dynamics. The RBI is now formally an inflation-targeting central bank, following the signing of a memorandum of understanding with the government. Monetary policy is devised by the MPC to target an inflation