The RBI said the new model is broken into three blocks: The first, or fiscal block, decomposes the government’s primary deficit into structural and cyclical components.
NEW DELHI: India’s central bank said it has revised its inflation-forecasting model to better capture how fiscal and monetary policy interact with real-economy elements.
The adjustments incorporate fiscal-monetary dynamics, India’s unique and often chaotic fuel pricing regime, and exchange-rate fluctuations and their impact on balance of payments, the Reserve Bank of India (RBI) said in its latest bi-annual monetary policy report published on Wednesday.
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