The wisdom of waiting

The October monetary policy — despite its remarkable inflation revision —was lessa story of action than of careful inaction.

- SAKSHI GUPTA

Inflation surprises in India often come dressed in the garb of oil shocks, monsoons, or sudden fiscal spurts. But this year’s shock has been ofa very different kind — inflation has quietly tipped off the stage. And almost nobody saw it coming. At the start of the financial year, the RBI had placed its inflation forecast at 4 per cent — inline with its median target. But since then, a series of downward iterations have now brought it down to 2.6 percent — markinga stunning 140 basis point revision in the last six months. Not just the RBI, even the most cautious economists have found themselves caught off-guard by the inflation decline this year.