InvestorQ : DO you think the RBI will now focus more on inflation control than on growth in IIP?
Anamika Sodhani made post

DO you think the RBI will now focus more on inflation control than on growth in IIP?

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Angel dcosta answered.
3 weeks ago
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In a way your assessment is correct. Most likely, going ahead, inflation will take centre stage in RBI monetary policy. You can argue that 4.48% inflation is still below the RBI outer limit of 6%. However, this still above the target of 4% and the bigger problem is the 6.11% core inflation, which is sticky. The RBI can no longer stay accommodative on the pretext of boosting growth. It is time to control the price levers to prevent it going out of control.

The other big factor for the RBI is US inflation, which came in at 6.32%. This is a 31-year high and was last seen during the Gulf oil crisis in 1990. The higher inflation in the US has also been an outcome of supply chain constraints as the demand has boomed but supply has failed to keep pace. Manufacturers are happy because this is giving them better price realizations. US is likely to act on rates soon and the RBI would most likely follow suit.

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