 "monetary policy, inflation")
After months of maintaining the status quo, the monetary policy committee could reach a turning point at its June meeting. Recent developments — both domestic and global — suggest three reasons to consider a shift from ‘neutral’ to a ‘withdrawal of accommodation’.
First, the economy is experiencing a strong cyclical recovery, having dusted off the twin shocks of demonetisation and implementation of the goods and services tax. Both the engines — private consumption and fixed investment —are currently robust. The strength in import volumes is also testament to solid domestic demand.
Second, consistent with increased domestic demand, core inflation has
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