Shift in MPC's policy stance can be looked at before 4% inflation, says RBI's state of economy report

The Reserve Bank of India (RBI) may shift its monetary stance from withdrawal of accommodation to neutral before reaching its inflation target, despite persistent food inflation. The report, prepared by deputy governor Michael Debabrata Patra and central bank's economic researchers, suggests that food price shocks over the past year are dominating headline inflation and households' expectations, undermining the gains of lowering core and fuel inflation through monetary policy and supply management.
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