Inflation outlook adverse, but economic contraction is over: RBI

The MPC now expects consumer price index-based inflation to average at 6.8% in the current quarter, and at 5.8% in January-March 2021

Continuing its pause on the policy rate in its December meeting, the Monetary Policy Committee (MPC) underlined that consumer inflation is on the higher side.
 
The MPC expects consumer price index-based (CPI) inflation to average at 6.8 per cent in the December quarter (Q3), and at 5.8 per cent in Q4 of financial year 2020-21 (FY21). This is substantially higher than its initial estimate of inflation falling in the 4.5-5-5 per cent range in the second half of FY21.
 
“The outlook for inflation has turned adverse relative to expectations in the last two months. The substantial wedge between