The RBI’s inflation obsession

The RBI finds itself in a fix. Inflation rules above its comfort level and growth has slowed down significantly, despite its hawkish stance in the last three-and-a-half years. Notwithstanding the growth tune that it plays intermittently, the RBI’s primary concern has been inflation control. True, as the central bank, it has the mandate to ensure price stability in the economy. However, unlike in some other countries where the central bank has an explicit mandate to keep inflation within a certain target, India follows a broader approach to inflation management.

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