Staying the course: What could prompt the RBI to change its approach?

Even though monetary policy cannot directly counter supply-led shocks to food prices, authorities can still demonstrate their commitment to controlling inflation

Even though the Reserve Bank of India (RBI) has consistently sounded hawkish since April 2022, what made this MPC decision different was that it was the first time in six meetings that the central bank materially raised its inflation projections. This action summed up the policy bias, which remains focused on bringing inflation close to the target level of 4 per cent. The only silver lining is that the current price rises are being driven by supply-led shocks, which are outside of the RBI’s ambit. However, there are some concerns creeping in about the interest rate trajectory if inflation stays