InvestorQ : Do you see the monetary policy of RBI changing stance away from inflation control?
diksha shah made post

Do you see the monetary policy of RBI changing stance away from inflation control?

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Riya Dwivedi answered.
1 month ago
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Probably these are early days to claim if the RBI would change its stance and again focus on growth. The US Fed has spoken about rate hikes, at least, till the end of 2022. RBI may be cautious about changing its stance at short notice and may wait 2-3 months before taking a call. Morgan Stanley is correct that monetary policy has just become unnecessarily hawkish in the last few months and perhaps calls for a change in stance.

Too much hawkishness may be justified in the US and EU and that too because the normal inflation levels are much lower. ON the other hand, India has average inflation levels of 4% and we are just about 300 bps above that levels. Also, once the impact of lower commodity prices and food prices are factored in, the inflation number should look a lot more sober. The RBI should avoid the temptation of getting too hawkish at this point because inflation in India is still largely a function of oil and food. Now both are slated to come down sharply.

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