ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

InflationSubscribe to Inflation

Monetary Policy Announcements of the Reserve Bank of India and the Role of Information Shock

Inflation-targeting central banks supplement their monetary policy announcements with communication in the form of speeches and publication of text documents. The markets react to the surprise component of the rate action and the communication by the central bank. Thus, the monetary surprise derived from the reaction of markets, following a policy announcement, is agglutinated with the central bank information. The present paper attempts to identify and examine the efficacy of such an information shock in influencing the inflation expectations of households, interest rate expectations of agents, output and inflation.

On the Depreciation of the Rupee

Post COVID-19, world economies are trying to accelerate their pace of recovery from the slowdown caused by disruption. In the process of generating an economic stimulus, many tools are being used, be it increased money supply, tapering, etc.

Need for Credit Resilience Score in India

Paired with the borrower score/ rating, a credit resilience score would better equip the fi nancial institutions to account for borrower resilience and make credit decisions accordingly. The requirement for CRS in India helps credit to fl ow uninterruptedly during good and bad times. Recognising the parameters used in the existing credit score for individuals and corporate credit rating, a framework for the development of CRS is suggested.

Monetary Policy and Stagflation

Monetary policies are traditionally viewed as having no direct effect on aggregate supply. This article argues that this view of neutrality of the supply side to monetary policies may change if we pay more attention to the role of money supply on the working capital requirements of firms.

Do Machine Learning Techniques Provide Better Macroeconomic Forecasts?

Machine learning techniques are now very common in many spheres, and there is a growing popularity of these approaches in macroeconomic forecasting as well. Are these techniques really useful in the prediction of macroeconomic outcomes? Are they superior in performance compared to their traditional counterparts? We carry out a meta-analysis of the existing literature in order to answer these questions. Our analysis suggests that the answers to most of these questions are nuanced and conditional on a number of factors identified in the study.

Gloomy Global Outlook

The synchronised monetary tightening and external sector shocks will hurt global growth.

Can Growth Be Sustained?

Slump in consumption, surging prices, and slow growth in key sectors are likely to stall the recovery.

A Horse Race among the Alternative Taylor Rule Specifications

The paper estimates a slew of augmented Taylor rule specifications using call and treasury bill rates. After accounting for break points, we calculate the output gap based on a single-index dynamic factor extracted from monthly high-frequency indicators that are representative of broad sectoral activity. In our study, we found that interest rates in India are mostly in line with the augmented Taylor rule specifications after the Reserve Bank of India started using flexible inflation targeting.

Spiralling Prices

It is a clear case of the government doing too little too late.

Inflation, Debt Sustainability, and Government Borrowing in the Time of the Pandemic

Public borrowing is essential to garner resources to combat the current pandemic. The ability to do so and adhere to the standard norms of debt sustainability will be harder for developing economies as compared to the developed, due to constraints, both structural and policy-induced. High food infl ation and the adoption of infl ation targeting will impose severe constraints on the ability to expand borrowing and maintain low levels of debt-to-GDP. In such a situation, governments must either rethink monetary policy and/or allow for debt ratios to rise. 


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