Room for rate adjustments if food inflation decreases: Viral Acharya

Acharya explains why food inflation should not be excluded from the inflation targeting framework

Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) and CV Starr Professor of Economics, Department of Finance, New York University Stern School of Business, explains why food inflation should not be excluded from the inflation targeting framework in an interview with Anjali Kumari. Edited excerpts:

Should monetary policy target inflation without taking food prices into account?

Food inflation influences both household and investor expectations of inflation. When these expectations remain stable, inflation uncertainty and term premiums stay low, which helps reduce borrowing costs across the economy — not just for governments, but also