Forceful, but not forceful enough.
Photographer: Vipin Kumar/Hindustan Times/Getty Images
Before the six-member committee that sets monetary policy for the Reserve Bank of India met this week, the government in New Delhi made its preferences very clear. Two members of Prime Minister Narendra Modi's economic advisory council — a body that he did without for a long time, but which was recently reconstituted following several policy stumbles — publicly declared that real interest rates were too high. But the RBI committee held firm and kept India's policy interest rate at six percent.
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This could have been, and was, predicted. India's central bank is now officially supposed to be targeting consumer price inflation and nothing else; the government agreed to this change over a year ago. And inflation has been inching up, driven by higher prices for food and fuel. In October, consumer price inflation was the highest in seven months.