Don’t Expect Central Bank’s Breather to Last

......Indeed, the phrase Mr. Rajan used in his remarks was “wide bands of uncertainty.” The RBI said it will act if there isn’t a “significant” reduction in headline inflation in the next round of data, or if core inflation doesn’t fall. In that case, the policy response will be “appropriately calibrated,” Wednesday’s statement said. No guesses as to what “significant” and “appropriate” will actually mean for the central bank’s purposes. Consumer and wholesale inflation data for December are scheduled to be released Jan. 13 and 14, respectively. Recent data releases have included sharp upward revisions to previous months’ inflation figures. The RBI’s suspicion is that price pressures are close to abating on their own. Recent high inflation largely is due to high vegetable prices, which in theory aren’t that affected by central-bank policy..............

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