PARAGRAPH, WORDS AND MEANING
PARAGRAPH OF THE DAY –
In inflation’s shadow: on RBI holding repo rates at 6% –
The Reserve Bank of India’s decision to keep the repo rate unchanged was no surprise given the focus with which the Monetary Policy Committee has approached its mandate: of keeping inflation in check. With the relevant measure of price gains, the Consumer Price Index, reflecting an acceleration in inflation for a sixth straight month in December, and that at the fastest pace in 17 months, the bank’s rate-setting panel must have had little difficulty in choosing to remain on hold. This was probably best exemplified by the reversal in stance of the six-member panel’s hitherto most dovish member, Ravindra H. Dholakia, to vote to stand pat on interest rates. This the MPC did while retaining a ‘neutral stance’, which gives it the flexibility to change gears in either direction. The RBI’s nominee, Michael Debabrata Patra, in fact voted to head off incipient price pressures by raising the policy rate by 25 basis points. Laying out the factors informing its decision, the RBI once again spotlighted the less than reassuring outlook for price stability. For starters, “an unusual pick-up in food prices in November”, combined with a “less than usual” softening in the winter seasonal food price moderation, meant headline inflation averaged 4.6% in the third quarter. The RBI had in December made a projection for inflation in the range of 4.3-4.7% in the six months through March 2018. With pump prices of petrol and diesel having risen sharply in January, the RBI has now been forced to raise its estimate for retail price gains in the fourth quarter to 5.1%. Extending the time horizon beyond the current fiscal, the inflation scenario gets even more worrying. Clouding the outlook are multiple uncertainties. These include the staggered impact of HRA increases by various State governments that may induce second order effects on prices; the pick-up in global growth, a factor the RBI also cites as a positive for the economy, that may push up crude oil and commodity prices worldwide; the Budget’s proposed changes to the minimum support price norms for crops as well as the proposals to increase customs duty on a range of goods; and the fiscal slippage, which could not only fan inflation but also risks increasing borrowing costs. The normalisation of monetary policy by advanced economies could spell a decisive end to global ‘easy money’ conditions and may trigger some flight of capital from emerging markets including India. The upshot is that the RBI sees CPI inflation hovering in the 5.1-5.6% range in the first six months of the new fiscal before moderating to 4.5-4.6% in the second half, subject to a big assumption: a normal monsoon in 2018. Under the looming shadow of inflationary risks, the RBI has again reasserted the need for unwavering vigilance on the price stability front.
WORDS AND MEANING –
Exemplified
Meaning: Be a typical example of.
Example: “the best dry sherry is exemplified by the fino of Jerez”
Synonyms: Typify, Epitomize
Stance
Meaning: The attitude of a person or organization towards something; a standpoint.
Example: “the party is changing its stance on Europe”
Synonyms: Attitude, Stand
Hitherto
Meaning: Until now or until the point in time under discussion.
Example: “hitherto part of French West Africa, Benin achieved independence in 1960”
Synonyms: Previously, Formerly
Dovish
Meaning: Supporting discussion or other peaceful solutions in political relationships rather than the use of force.
Example: He is a dovish politican who was one of the signers of a model peace treaty.
Synonyms: Peace, Calm
Head off
Meaning: To start a journey or leave a place.
Example: What time are you heading off?
Synonyms: Advancing, Moving forward
Incipient
Meaning: Just beginning.
Example: Signs of incipient public frustration.
Synonyms: Starting, Beginning
Antonyms: End
Spotlighted
Meaning: Direct attention to (a problem or situation).
Example: “the protest spotlighted the overcrowding in British prisons”
Synonyms: Highlight, Underline
Scenario
Meaning: A postulated sequence or development of events.
Example: “a possible scenario is that he was attacked after opening the front door”
Synonyms: Situation
Clouding
Meaning: Make or become less clear or transparent.
Example: “blood pumped out, clouding the water”
Synonyms: Darken, Dirty
Antonyms: Clear
Staggered
Meaning: Continue in existence or operation uncertainly or precariously.
Example: “the treasury staggered from one crisis to the next”
Slippage
Meaning: The action or process of slipping or subsiding.
Example: “£16 million has been spent on cracks and slippage”
Decisive
Meaning: Settling an issue; producing a definite result.
Example: “the archers played a decisive part in the victory”
Synonyms: Deciding, Conclusive
Antonyms: Insignificant
Trigger
Meaning: Cause (an event or situation) to happen or exist.
Example: “an allergy can be triggered by stress or overwork”
Synonyms: Precipitate, Prompt
Upshot
Meaning: The final or eventual outcome or conclusion of a discussion, action, or series of events.
Example: “the upshot of the meeting was that he was on the next plane to New York”
Synonyms: Result, Outcome
Antonyms: Cause, Origin
Hovering
Meaning: Remain poised uncertainly in one place or between two states.
Example: “her hand hovered over the console”
Looming
Meaning: (of an event regarded as threatening) seem about to happen.
Example: “there is a crisis looming”
Synonyms: Threaten, Menace
Unwavering
Meaning: Not wavering; steady or resolute.
Example: “she fixed him with an unwavering stare”
Synonyms: Steady, Fixed
Antonyms: Unsteady
Vigilance
Meaning: The action or state of keeping careful watch for possible danger or difficulties.
Example: “security duties that demand long hours of vigilance”
Synonyms: Care, Surveillance
Antonyms: Inattentive
