The Hindu Editorial Analysis : 10th December 2022

The Hindu Editorial Analysis:

The Hindu is now synonymous with civil services aspirants. What brought on this cult readership?

We all are aware of the importance of reading The Hindu newspaper with the aspect of improving reading ability, easily comprehending paragraphs, getting updated with the current events, improving essay writing and many more. For a banking aspirant it becomes necessary to read editorials for vocabulary. In this article we are going to discuss the points of today’s editorials with practice questions and important vocabs.

Anchoring prices.

  • The Reserve Bank of India’s latest policy statement has unequivocally acknowledged that price stability must remain the primary focus of monetary policy now when,as Governor Shaktikanta Das admitted, “the CPI price momentum remains high”.
  • Elucidating the rationale behind the Monetary Policy Committee’s decision to raise the benchmark repo rate by 35 basis points to 6.25%, he underlined that the ‘battle against inflation was not over’ regardless of a moderation in its pace.
  • Retail inflation remains above the 6% upper tolerance mark and is projected to surpass and then ease just below that level in the last two quarters of this fiscal year.
  • The MPC retained its full-year CPI inflation projection at 6.7%, but bumped up the forecasts for Q3 and Q4 by 10 basis points each to 6.6% and 5.9%, respectively, acknowledging that inflation expectations are now well adrift of the MPC’s mandated 4% target.
  • Worse, core inflation, or price gains that strip out volatile food and fuel costs, has also stayed stubbornly stuck around the 6% level with price pressures across most of the constituent sub-groups.
  • This is a far from reassuring outlook for price stability, especially when one considers that the resurgent demand across services is likely to trigger price increases when firms begin to pass on higher input costs.
  • The RBI’s policy panel was, however, far from unanimous in its decisions.
  • While one of the six members voted against raising the policy rate,presumably so as to not dampen the as yet tentative economic recovery, two members dissented over the policy stance remaining ‘focused on the withdrawal of accommodation’.
  • The majority was, however, emphatic that “further calibrated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects”.
  • Anchoring price stability would ultimately serve to ‘strengthen medium-term growth prospects’, they reasoned.
  • After all, as the RBI’s latest Monetary Policy Report observed, ‘second-round effects could keep inflation at elevated levels even beyond 8 quarters’ and it was therefore imperative to make policy interventions to anchor inflation expectations.
  • Governor Das also pointed out that even after the latest increase, the benchmark interest rate still remains very much ‘accommodative’ when adjusted for inflation.

Practice Questions:

  • What did the policy of the Reserve Bank of India acknowledge recently?
  • Why does Governor Das point this out?

Important Vocabs:

  • Monetary- related with money
  • Persistence- quality that allows someone to continue doing something
  • Anchored- to stop a boat moving by using an anchor
  • Dissent- disagreement with official
  • Elucidate- to make something clearer by explaining it

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