The art and science of managing inflation

The conduct of monetary policy is not based on simplistic binaries, particularly during times of extraordinary uncertainty


Illustration: Binay Sinha

Saugata Bhattacharya
The conduct of monetary policy in India has been critiqued by economists in recent weeks. The following are some of the perceived lacunae. One, that there has been an unwarranted delay in shifting priority from supporting growth to controlling inflation. The latter is anyway the primary objective of the Monetary Policy Committee (MPC) given its mandate as a (flexible) inflation targeting institution. Two, that policy has been pursuing multiple objectives, in addition to balancing the inflation-growth trade-off, resulting in a loss of focus on the primary objective of price stability, preventing a timely response to persistently high inflation. As a corollary, a disconnect, even dissonance, has emerged between statements and actions, hindering clear communication and forward guidance to markets.

Each of
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

First Published: Jun 28 2022 | 12:30 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on are available only to BS Premium subscribers.

Register to