Lombard Street Research Ltd. joins Nomura in sounding the alarm over inflation in India. Bloomberg News reports:
India may need “assertive” monetary tightening to control inflation similar to the steps taken by former U.S. Federal Reserve chairman Paul Volcker in the early 1980s, according to Lombard Street Research Ltd. “India could soon need Volcker’s policy,” Maya Bhandari, a senior economist at Lombard Street in London, said in a report. “Inflation is poised to shoot through the roof.”
Consumer price gains in India “aren’t far off” the levels seen in the U.S. as Volcker took the helm at the Fed, Bhandari said. Volcker pushed the federal funds rate to as high as 20 percent to throttle inflation, which peaked at 14.8 percent in March 1980. The Reserve Bank of India could find itself forced to adopt Volcker-like policies to curb “serious and growing” inflationary pressures, Lombard Street said in the report.
Dr. Duru