Virtual policies

Real Life actors such as RBI try to manage supply of money to keep inflation in check

Recently, Real Life’s Reserve Bank of India (RBI) cut the policy rate by 25 basis points. After a string of data that seemed to suggest lower-than-expected inflation and a slowing economy, the rate cut was widely expected. However, it is also understandable why RBI chose to be cautious, cutting rate only by 25 basis points and not 50 basis points or more as many had suggested. The reason as put by RBI: “A conclusive segregation of transitory and structural factors driving the disinflation is still elusive”. English translation: RBI stopped short of agreeing with the notion of a downward “paradigm