Motilal Oswal: Should India Relax Its Inflation Target? 
A customer hands an Indian one hundred rupee banknote to a roadside vegetable vendor in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Motilal Oswal: Should India Relax Its Inflation Target? 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

Two major developments occurred in the realm of Global Central Banking over the past few weeks -

relaxation of the inflation mandate by the U.S. Federal Reserve and the recent proposal in Indonesia, which recommends the inclusion of the Finance Minister and another minister in the economics sector in monetary policy matters.

With the imminent reshuffling in India’s monetary policy committee (MPC), domestic demands have emerged to relax the inflation target of 4% (with up/down 2 percentage point) and also for the MPC to be more supportive of economic growth.

In this note, we reiterate our argument that Indian authorities must not take cues from the U.S.’ policies because of the massive differences between the two economies.

In light of the Covid-19 pandemic, it is rightly suggested to ease the monetary policy to support economic growth.

However, there are no free lunches in the world and same policies could yield highly varied results in different nations depending on the domestic economic environment

Click on the attachment to read the full report:

Motilal Oswal Ecoscope Sep 23, 2020.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.