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How Covid-19 disruptions and food inflation have worsened RBI's trilemma

In India, with supply chain disruptions and food prices pushing inflation stubbornly above target, handling the trinity is looking tougher

Bhargav Dasgupta, MD & CEO, ICICI Lombard
Bhargav Dasgupta, MD & CEO, ICICI Lombard

In India, with supply chain disruptions and food prices pushing inflation stubbornly above target, handling the trinity is looking tougher for the central bank and its leader, Shaktikanta Das, who tested positive over the weekend for Covid-19. The Reserve Bank of India has signaled that letting the rupee strengthen is the least bad option as the economy shifts from being a global growth hotspot to a coronavirus hotbed. The inflation spike prevented the RBI from cutting interest rates at its past two meetings, despite the economy forecast to ...