You are here: Home » Opinion » Columns
Business Standard

What explains RBI's 'near-unanimous' inaction even as inflation was rising?

For the RBI, a correct reading of its mandate would have been that the inflation target is 4%, not 6%. And action to raise interest rates should have begun last year, writes T N Ninan

Topics
Indian Economy | Weekend Ruminations | CPI-based Inflation

T N Ninan 

T N Ninan

A former governor of the (RBI), reminiscing on his days at Mint Road in Mumbai, told your columnist once that one of his rules was never to surprise the market with negative news. He said it was ok to give the market a positive surprise but, if there was unpleasant action coming, the market should be given advance warning of what to expect. Given the way in which the RBI’s off-cycle jacking up of the policy rate for overnight money (and that by more than the usual 25 basis points) has been received, there can be little doubt that it has come as a negative surprise — even if most people knew already that a cycle of rate increases was in the offing. Also noteworthy is the unanimity on the subject within the monetary policy committee, just as there was unanimity a month ago when no change was announced. This is an unusual two-way groupthink, even as it appears that the RBI is now trying to make up for lost time in tackling .

TO READ THE FULL STORY, SUBSCRIBE NOW NOW AT JUST RS 249 A MONTH.

SUBSCRIBE TO INSIGHTS

What you get on Business Standard Premium?

  • icon Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • icon Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • icon Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
  • icon Pick your 5 favourite companies, get a daily email with all news updates on them.
  • icon 26 years of website archives.
  • icon Preferential invites to Business Standard events.

OR

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, May 06 2022. 18:42 IST
RECOMMENDED FOR YOU
.