Central banking conundrum

RBI should not continue to ignore inflation risks

US Federal Reserve Chairman Jerome Powell has told lawmakers that inflation has been higher and a bit more persistent than expected. While Mr Powell continues to maintain that higher inflation is transitory and prices will ease in the coming months, the rate-setting body of the Fed has in its last meeting adjusted its interest rate projection. The inflation rate was at 5.4 per cent in June. Most large central banks intervened heavily in 2020 to contain the impact of Covid-induced disruption in the economy. Although economic activity is now recovering, central banks do not want to make the mistake of