RBI should end its stop-go policies

..........The truth is that RBI is trying to do everything at the same time—ease monetary policy to push down yields, tighten monetary policy to curb the sell-off in the rupee, while at the same time trying to curb inflation by tightening monetary policy and easing monetary policy to spur growth. Confused? Not as much as the RBI… It is about time that somebody reminds the RBI about the Tinbergen Rule: For each and every policy target there must be at least one policy tool. If there are fewer tools than targets, then some policy goals will not be achieved. The only thing RBI fundamentally can do is to control the money base to hit one nominal target. Therefore, it is also about time that RBI comes clean on this.............

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