Damned if you do, damned if you don’t — that’s the situation the Reserve Bank of India (RBI) finds itself in as it prepares to unveil the fourth bi-monthly monetary policy statement today.Legislation mandates the central bank to target consumer price inflation within a specific band. Rise in Brent crude prices and the probability of inflation turning more
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the policy and how the RBI articulates its stand on various macroeconomic issues.This time it is a tightrope walk for the central bank as macroeconomic stability too is at stake. However, taking a cue from well-established principles followed by the central banks of developed countries and the RBI’s own legislative mandate, inflation targeting would be the primary objective.