The RBI’s new governor Shaktikanta Das has delivered what the Modi government was hoping for. The “calibrated tightening” stance was jettisoned at his first policy meeting today in favour of a rate cut. A low level of headline inflation provided justification for the move. But with core inflation high, and a growing perception that the central bank has allowed its focus on controlling inflation to slip, higher inflation and higher interest rates are likely over the long term.
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