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RBI Working Paper Finds A Steady Decline In Trend Inflation In Recent Years


There has been a steady decline in trend inflation in India, the Reserve Bank of India noted in a Working Paper titled Measuring Trend Inflation in India . The Paper is authored by Harendra Kumar Behera and Michael Debabrata Patra. Central to the design and conduct of monetary policy is the concept of trend inflation, the level to which actual inflation outcomes are expected to converge after short run fluctuations from a variety of sources die out. The paper seeks to estimate trend inflation in India to find the answer to a question that goes to the root of flexible inflation targeting (FIT) - is the choice of the target for inflation consistent with its trend? ....

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USD/INR Price News: Indian rupee refreshes two-month top below 73.50 as RBI backs 4% inflation target


Dec 29, 2020 06:47 GMTFXStreet News
USD/INR stays heavy near the lowest since October 21.
RBI’s working paper proposes medium-term inflation target at 4% ahead of five-year review of the goal in March.
Broad US dollar weakness on the house passage of the covid aid paycheck also favors the bears.
USD/INR remains on the back foot near 73.40, down 0.17% intraday, during the initial Indian trading on Tuesday. The pair recently dropped after the Reserve Bank of India’s (RBI) working paper triggered cautious optimism despite challenges due to the coronavirus (COVID-19) conditions at home.
“Retail inflation has stayed around 7% over the last three months, as the government pumped money into the system to revive Asia’s third-biggest economy from the impact of the coronavirus crisis. High food prices have also contributed to the rise, limiting the space for the Reserve Bank of India (RBI) to further ease its monetary policy,” said Reuters in the news. ....

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