But the impact of this rate cut needs to be looked together with the interim budget proposals. Now what numbers (levels or growth rates) should one look at for output gap estimations, or for other monetary statistics, is something left to the Reserve Bank of India (RBI). That apart, the MPC report gives a feeling that interest rate policy is used only for either inflation control or to revive growth. But there are other open-economy macro issues that needs equal focus while setting interest rates. In that sense, there is a need to have a re-look at the present monetary policy framework.

Source: Mint February 07, 2019 19:52 UTC