 "RBI, money, monetary policy")
Another inflation data point has been released with the inflation rate climbing once again. And as expected, commentators are invoking the “stagflation” ghost. Meanwhile, the Reserve Bank of India (RBI) continues to chase completely dissonant monetary policy goals, intervening to weaken the rupee even as they maintain a high level of real interest rates.
Monetary policy, especially when operating through the interest rate mechanism, cannot address inflation emerging from consumption items in which demand is either price inelastic and/or interest rate inelastic. Consumption of these items is also called non-discretionary consumption because these items typically include only necessities. Any
Monetary policy, especially when operating through the interest rate mechanism, cannot address inflation emerging from consumption items in which demand is either price inelastic and/or interest rate inelastic. Consumption of these items is also called non-discretionary consumption because these items typically include only necessities. Any
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