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Policy and regulations

Economic Survey’s plan to drop food from inflation targeting is premature

Economic Survey’s plan to drop food from inflation targeting is premature
Economic Survey’s plan to drop food from inflation targeting is premature
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Synopsis

A change in inflation targetting framework could distort inflation expectations and create uncertainty for investors.

When the target appears tough to achieve, just shifting the goalpost is an idea for the weak. The Economic Survey’s suggestion that inflation targeting framework should consider a variable without food items is turning the clock back and surrendering the hard-won credibility battle. For years when India was suffering high inflationary pressures that distorted financial behaviour of people, the argument was that monetary policy was a wrong tool
( Originally published on Jul 22, 2024 )
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The Economic Times