Once again, it seems that inflationary pressures from the rest of the world will creep into the Indian economy as well (Inflation clouds gather over Indian economy, Business Standard, May 3 2010)
And even though there are voices suggesting increased demand, there are others not so sanguine. More importantly, there’s no one denying the impact of higher international commodity prices, which seems to be the only certainty in an otherwise uncertain environment.
As far as monetary policy goes, it would make immense sense to tackle a certain cause rather than risk targeting the uncertain one.
Hopefully the RBI will agree…