RBI monetary policy: The tide is turning

The RBI's monetary policy should be driven by domestic factors and not the Fed

Six important developments have occurred since the Reserve Bank of India (RBI’s) June Monetary Policy Committee (MPC) meeting.

First, the global backdrop. We are now in the midst of a more broad-based global policy easing. The US Fed has moved back from a single inflation mandate to its dual mandate. The weak US July employment report has re-ignited the US soft landing/hard landing debate. US yields have tumbled, financial conditions are tightening, and the question now is how soon the Fed will move. “Higher for longer” has now become a thing of the past.

Second, commodity prices