Column : Not more than 25 bps cut this time
The arguments for monetary policy have always been the classic growth versus inflation debate. But this is passé today because we are no longer on this tradeoff as the belief is that low growth is not due to monetary considerations. The discussion board then moved to whether policy affects inflation. Here, too, the core inflation argument fell flat as it has not moved RBI, which still talks of generalised inflation. Logically, given that demand is low, we cannot be having excess demand forces anywhere. The debate then went on to the platform of which inflation rate we are talking of: WPI inflation or CPI inflation. In one of the earlier policies, RBI has emphasised that retail prices are more important as they affect us as consumers.
The portrait in front of us is quite clear. Growth is down or stagnant and there are few signs of it picking up in the near future as there is nothing much
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