Benefits of inflation.

As expected, "The Monetary Policy Committee of the Reserve Bank of India (RBI) in its December review meeting unanimously decided to keep the policy repo rate unchanged at 6.5%, thus maintaining status quo for the fifth straight time." "Barring the latest pauses, the RBI raised the repo rate by 250 basis points cumulatively to 6.5% since May 2022 in the fight against inflation." DNA. For comparison, the US Federal Reserve has raised its Funds rate 11 times, from 0 lower bound to 5.25%-5.50%. Forbes. "India's foreign exchange reserves stood at $604 billion for the week ending 1 December, said the RBI." It was $597.94 billion in the week ending 24 November. ET. Despite bulging foreign exchange reserves the rupee has dropped to a record low of 83.43 to the dollar. xe.com. "India's central bank today (yesterday) left its inflation forecast for this fiscal year unchanged at 5.4%, despite food price rise concerns, uncertainty around crude costs even amidst a recent slump and chances of domestic growth momentum creating demand pressure on inflation." ET. So, inflation may rise because of higher food and oil prices, and, if that doesn't happen, economic growth will jump creating more wealth, which will lead to higher demand from 1.4 billion people and soaring prices as supplies will fall short. RBI Governor Shaktikanta Das said "that the future is very fickle and providing a forward guidance on policy is not possible." "On the growth front the RBI revised its GDP growth forecast, anticipating a growth rate of 7% for FY24." ET. Despite a "fickle future" the RBI is forecasting GDP growth at 7% and consumer price (CPI) inflation at 5.4% for the financial year. Whence this stubborn optimism? Perhaps, it has been told. Indians have little faith. "The households expect inflation to continue to be in double digit levels over a one year time horizon" as "Median inflation expectation increased for one year horizon by 20 bps (basis points) to 10.1% in November." Expectations for current inflation declined from 8.4% to 8.2% in November while expectation for 3-month ahead was stable at 9.1%. India's "Annual retail inflation fell to 4.87% in October on lower food prices, down from 5.02% the previous month." Reuters. In the US, "The University of Michigan's latest consumer survey...showed that Americans' long-run inflation expectations rose to 3.2% this month, the highest level since 2011." "If there's one thing that would make the Fed quake in its boots, it would be worsening inflation expectations." CNN. Why is the Fed quaking while the RBI is smiling? Because Indians are poor and cannot bargain for higher wages and inflation, especially food inflation, hurts the poor enormously. Hence, Prime Minister Narendra Modi announced free food grains for over 800 million Indians for 5 years. TOI. The next general election must be held by April-May 2024. wikipedia. Who wouldn't love poverty?