The Unassuming Economist

From a paper by Surjit Bhalla, Karan Bhasin, and Prakash Loungani:

“The trend inflation levels in India and other emerging market economies suggest a downward trajectory regardless of the adoption of inflation targeting. Therefore, it is difficult to conclusively establish that the adoption of inflation targeting in India led to a moderation in inflation or anchoring of inflation expectations. There is also some evidence that the anchoring of household expectations predates the formal adoption of inflation targeting. Similarly, long-term expectations in India have remained firmly anchored since the early 2000s. In terms of growth, the high real interest rates policy followed during the initial years of inflation targeting has adversely affected India’s growth dynamics.”