MONETARY POLICY CONCERNS AMID ECONOMIC SHIFT
Why in the News?
- Monetary Policy Committee (MPC) members express concerns on containing inflation and boosting growth.
Source: WBPSC
Key Strategies for Benign Outcome:
- MPC members outlines two essential strategies for a benign outcome.
- First, maintaining a restrictive monetary policy to guide inflation toward the 4% target.
- Second, preventing excessive real interest rates as inflation drops below the upper tolerance band.
- Emphasis on the vulnerability of inflation to food price spikes.
Inflation Outlook :
- Inflation vulnerability to food price spikes, causing persistent pressures.
- Households express wariness, expecting unchanged inflation in the short term but foreseeing a rise over the year.
- Consumers exhibit increased pessimism about future inflation, emphasizing the need for a vigilant and restrictive monetary policy.