Fed-style dot plot can guide rates well

Policy matter: A housekeeping staff cleans the area outside the entrance of the RBI headquarters in Mumbai. An aggressive pace of hikes to tame price increases has been suggested for the central bank. — AFP

MUMBAI: India’s monetary policy can avoid falling behind the curve by following a forward guidance similar to the US Federal Reserve’s (Fed) so-called dot plot, according to the South Asian nation’s most hawkish interest-rate setter.

The central bank’s earlier pledge to keep policy ultra loose for as long as necessary restrained it from raising its key lending rate in April despite inflation concerns taking centre stage, Jayanth Rama Varma, an external member of the monetary policy committee (MPC), said in an email interview.