Rational policy pause

Food prices tend to obstruct the disinflation process

The first Monetary Policy Committee (MPC) meeting after the Lok Sabha elections rightly decided to leave the policy repo rate unchanged last week. Although the headline consumer price index-based inflation rate came down in recent months, it is expected to remain above the target of 4 per cent this financial year. However, the upward revision in growth projection surprised many on the street and helped push up the stock market. The MPC expects the Indian economy to grow 7.2 per cent this financial year, compared to the previous projection of 7 per cent. Notably, the Indian economy expanded by a