The art and science of managing inflation

The conduct of monetary policy is not based on simplistic binaries, particularly during times of extraordinary uncertainty

The conduct of monetary policy in India has been critiqued by economists in recent weeks. The following are some of the perceived lacunae. One, that there has been an unwarranted delay in shifting priority from supporting growth to controlling inflation. The latter is anyway the primary objective of the Monetary Policy Committee (MPC) given its mandate as a (flexible) inflation targeting institution. Two, that policy has been pursuing multiple objectives, in addition to balancing the inflation-growth trade-off, resulting in a loss of focus on the primary objective of price stability, preventing a timely response to persistently high inflation. As a