Sakshi Batra gets in conversation with Moneycontrol's Deputy Executive Editor, Gaurav Choudhury, to find out what data means for the country.
The latest price data released by the CSO showed that consumer price index (CPI)-based inflation, remained comfortably within RBI's target level of 4 percent.
Lower minimum support prices, higher imports, lower production growth and finally demonetisation led to food prices being forced down with disastrous consequences for farmers
The poll of 37 economists, conducted March 5-7, showed consumer price inflation, due to be released at 1200 GMT on March 12, is expected to have picked up to 2.43 percent last month from January's 2.05 percent.
Sakshi Batra does a 3 point analysis of the highlights of the opening session.
Changing the target or building higher tolerance for inflation in the policy framework would not be easy and will have implications for financial markets
Wholesale inflation, measured by the Wholesale Price Index (WPI), grew 2.84 percent in January 2017
Retail inflation stood at 2.05 percent in January 2019 compared with a revised 2.11 percent in December 2018
If you are a saver (or investor in fixed income) you need to plan for a change in cash flows in this year.
Consumer food price index stood at (-) 2.17 percent in January from (-) 2.51 percent in December.
Lower inflation on a durable basis would help reduce the risk premium and bring down the borrowing cost.
The government has done a marvellous job of keeping expectations high, which should help in the elections
The revised inflation projections could potentially imply cumulative rate cuts of around 50-75 bps over the course of 2019. Our inflation estimates suggest that another 25 bps cut in April.
On Thursday, the Reserve Bank of India caught financial markets off-guard by reducing its key policy rate by 25 basis points to boost growth and as inflation has remained benign.
The central bank has also announced a few steps that will support consumption
With both fiscal and monetary policy becoming expansionary, it is possible that inflation might pick up
For this fiscal, it revised downwards its inflationary estimates to 2.8 percent in Q4
While macro fundamentals have changed, cutting rates at this stage could raise credibility issues
It would be interesting to see how the MPC interprets the new fiscal roadmap
The RBI is scheduled to announce its sixth bi-monthly policy review for the fiscal on February 7. It would be the first Monetary Policy Committee meeting under RBI Governor Shaktikanta Das, who took charge in December 2018 following sudden exit of Urjit Patel.
The minister said India has contained the double-digit inflation despite generating a high growth rate.
A misdiagnosis can lead to inefficient solutions and end up increasing the cost for the economy in the long run.
The problem with inflation data is that no one really knows how the RBI or Monetary Policy Committee is looking at things. The RBI is trying to increase liquidity even though there is no real liquidity challenge in the market
Sakshi Batra gets in conversation with Gaurav Choudhury, Deputy Executive Editor, Moneycontrol to find out what lower inflation means for the economy and will the RBI now change its monetary policy stance in the upcoming policy?
In this scenario, RBI would do well to ensure adequate liquidity, rather than cut rates