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RBI: inflation could spur shift in stance
Context:
- RBI Governor Urjit Patel observed that consumer price inflation was the main yardstick to determine policy rates.
Why in news?
- The Monetary Policy Committee of the Reserve Bank of India (RBI) could shift from its current ‘neutral’ policy stance to a ‘withdrawal of accommodation’ stance if headline inflation projection for the year ahead remained well above the target.
- RBI has a mandate with keep retail inflation between 2% and 6%, decided at its sixth bimonthly policy review to keep interest rates unchanged, while maintaining a neutral stance.
- RBI Governor Urjit Patel observed that consumer price inflation — the main yardstick to determine policy rates — had accelerated for a six consecutive month in December.
- Inflation was getting generalised with rising input prices.
