Synopsis: Many economists are criticizing the RBI’s role in inflation targeting. They are suggesting alternatives to inflation targeting. Let’s have a look at them. Contents1 Background2 Why many people have criticised RBI’s role in inflation targeting?3 Alternative suggestions to inflation targeting:4 Why RBI should continue Inflation targeting? Background The central government confirmed the continuance of… Continue reading Alternatives to Inflation Targeting
Tag: ECO_1
Need of Continuing with Inflation Targeting
Synopsis: Inflation is still a big worry for policymakers. That is why the government is still willing to retain the inflation targeting. Introduction The Finance Ministry will continue with the inflation-targeting framework. It will guide the interest rate decisions of the RBI’s Monetary Policy Committee over the five-year period. The Department of Economic Affairs notified… Continue reading Need of Continuing with Inflation Targeting
Center to Retain the “Inflation Targeting” at 4% for MPC
Contents1 What is the news?2 Introduction 3 Inflation Targetting 4 About MPC (Monetary Policy Committee) What is the news? As per the top finance ministry official, the center will retain the Inflation Targeting of 4% for MPC. Introduction The Centre will retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points. This… Continue reading Center to Retain the “Inflation Targeting” at 4% for MPC
Impact of inflation targeting in India
Synopsis: According to the Executive Director IMF, Surjit S Bhalla, Inflation targeting has been ineffective in controlling inflation. Moreover, it has also contributed to a decline in GDP growth because of high repo rates. About inflation targeting The concept of ‘Inflation targeting’ was got acceptance in New Zealand first. Later, 33 countries adopted it as… Continue reading Impact of inflation targeting in India
Relevance of Inflation Targeting in India
Synopsis: Inflation control will always be relevant. But there is no conclusive evidence that the policy of inflation targeting has worked in India. Background The RBI was tasked with a mandate of the inflation target of 4 percent with a 2% deviation either way in June 2016. This agreement between the centre and the RBI… Continue reading Relevance of Inflation Targeting in India
Factors affecting present inflation level in India
Synopsis: The recent January 2021 retail inflation data provides relief to monetary authorities. Consumer Price Index (CPI) stood at 4.06% which is a desired outcome for ensuring macroeconomic stability. Background: The inflation had remained above the RBI’s threshold mark of 6% for six months till November. The ideal range of CPI is 2-6%. In January… Continue reading Factors affecting present inflation level in India
Why prices of Petrol and Diesel are rising?
Synopsis: Retail prices of petrol and diesel have reached record highs in India. One major reason is a heavy tax on Petrol and diesel in India. Introduction The price of petrol is touching Rs 89 per litre in Delhi and diesel reaching Rs 86.30 per litre in Mumbai. The government states that the reason behind… Continue reading Why prices of Petrol and Diesel are rising?
RBI’s expansionary policy and challenge of the impossible trinity
Synopsis: RBI need to exit out of its expansionary policy and manage ‘the impossible trinity’, i.e. Capital inflow, inflation and exchange rate. Source: The Hindu Introduction RBI adopted the extraordinary expansionary policy after Covid-19. It reduced policy interest rates aggressively to increase the liquidity in the market. It also provided targeted assistance to especially distressed sectors. But, now RBI… Continue reading RBI’s expansionary policy and challenge of the impossible trinity
India’s retail inflation
Context- Retail inflation showed signs of easing in November, led by easing prices of some food items. More in news- Consumer Price Index inflation stood at 6.93% in November 2020 compared to 7.61% in October, according to data released by the Ministry of Statistics and Program Implementation, though it remained above the comfort level of the… Continue reading India’s retail inflation
RBI allows RRBs to access LAF, MSF windows
Source: Click here News: Reserve Bank of India(RBI) has allowed regional rural banks (RRBs) to access the liquidity adjustment facility(LAF), marginal standing facility(MSF) and call or notice money markets with the aim to facilitate better liquidity management for these lenders. Facts: Liquidity Adjustment Facility(LAF): It is a facility extended by the Reserve Bank of India to the banks… Continue reading RBI allows RRBs to access LAF, MSF windows
