Increasing inflation risks

Global uncertainty will weaken recovery

Several analysts had questioned the Monetary Policy Committee’s (MPC’s) latest inflation projections for the next fiscal year. The rate-setting committee in its last meeting in February had projected the inflation rate based on the consumer price index (CPI) to average 4.5 per cent in 2022-23. Global events since have significantly increased inflation risks, and the committee would need to make adjustments in its projections. The MPC and RBI would also need to adjust their policy stance and operations accordingly. The inflation rate in February increased to an eight-month high of 6.07 per cent, which is above the tolerance band of