Global Inflation Trends and Movement Of Inflation Behaviour In India -An Evaluation
High inflation has an adverse effect on growth due to as number of factors: distribution of relative prices which lowers economic efficiency; redistribution of wealth between debtors and creditors; aversion to long-term contracts and excessive resources are devoted to hedging inflation risks. In developing economies, in particular, an additional cost of high inflation emanates from its adverse effects on the poor population. Maintenance of low and stable inflation has thus emerged as a key objective of monetary policy. Against this backdrop, a sincere effort is made to address on the critical assessment of the various factors leading to international inflation behaviour; the inflation targeting as a measure of framework; the conduct of monetary policy in a low inflation environment in the context of the growth -inflation trade -off. Addressing on the behaviour of inflation in India and in view of the growing openness of the Indian economy coupled with a market - determined exchange rate system, the attempt made to estimate pass-through of exchange rate to domestic inflation significant to note. Finally, the paper ends with concluding observations.
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