Turn and bounce

MPC needs to be extremely vigilant

Central banks around the world have been on a sticky wicket, especially since the commencement of the recovery from the disruption caused by the pandemic. The inflation rate surged in most advanced economies to levels not seen in decades. After the initial misreading and reluctance, systemically important central banks acted decisively. The Reserve Bank of India (RBI) increased the policy repo rate by 250 basis points since May 2022 to contain inflationary pressures before pausing. The pause was extended last week after the bi-monthly Monetary Policy Committee (MPC) meeting. Although the outcome of the meeting was expected, the RBI did