Lower inflation target to hurt growth, but will bring financial stability: RBI study
By IANS |
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Reserve Bank of India (RBI). (File Photo: IANS). Image Source: IANS News
Mumbai, May 24 : A Reserve Bank of India (RBI) study has suggested a decision to have a lower inflation target would jeopardise the long-term growth but help in bringing in financial stability. The policy makers may choose to set the inflation target below the threshold level, but only by consciously sacrificing long-term real growth of GDP and hence the adverse impact on the rate of poverty alleviation, said the study titled Threshold Level of Inflation - Concept and Measurement
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Divergences in rural and urban inflation do not persist for long: RBI paper The paper was authored by by Binod B Bhoi, Himani Shekhar and Ipsita Padhi, Department of Economic and Policy Research, RBI Representational Image. AFP
Mumbai: Rural-urban inflation divergence does not persist in the long run and converges over time, and both exhibit a long-term equilibrium relationship, said an RBI article.
This convergence of rural-urban inflation supports the relevance of one inflation target as nominal anchor at the national level, said the article prepared by Binod B Bhoi, Himani Shekhar and Ipsita Padhi, Department of Economic and Policy Research, RBI.
Divergences in rural, urban inflation do not persist for long: RBI paper
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Last Updated: Dec 27, 2020, 11:45 AM IST
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Empirical estimates, it said, revealed that the differentials between rural and urban inflation are transient and both exhibit a long-run equilibrium relationship, with a significant error correction in the short-run.
(Representative image)
Rural-urban inflation divergence does not persist in the long run and converges over time, and both exhibit a long-term equilibrium relationship, said an RBI article. This convergence of rural-urban inflation supports the relevance of one inflation target as nominal anchor at the national level, said the article prepared by Binod B. Bhoi, Himani Shekhar and Ipsita Padhi, Department of Economic and Policy Research, RBI.