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Source: Nanfang Daily Online Edition     time: 2022-07-08 02:21:11

365 International Entertainment mingfa international account opening ,Monetary policy actions likely to be more moderate than other nations, says RBI Deputy Guv Patra

  


  

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  Monetary policy actions likely to be more moderate than other nations, says RBI Deputy Guv Patra

RBI, Reserve Bank of India, monetary policy, Economy, India, RBI, Reserve Bank of India, Michael Pat
Image Source : FILE PHOTO

RBI Deputy governor Patra said that there are indications that inflation may be peaking while speaking at a session on 'Geo-Political Spill-overs and Indian Economy' at PHDCCI  

Highlights

  • RBI has already raised the key policy rate by 90 basis points in May and June to 4.9 percent
  • The Reserve Bank in its bi-monthly monetary policy review raised the benchmark repo rate
  • Govt has tasked the RBI to ensure inflation remains at 4% with a 2 percent deviation on either side

RBI Deputy Governor Michael Debabrata Patra on Friday exuded confidence that the monetary policy actions will be more moderate than the rest of the world, as inflation is expected to fall below 6 per cent in the January-March quarter of the current fiscal. The Reserve Bank has already raised the key policy rate by 90 basis points in May and June to 4.9 per cent to tame high inflation, mainly due to supply disruptions on account of the ongoing Russia-Ukraine war.

Speaking at a session on 'Geo-Political Spill-overs and Indian Economy' at PHDCCI, Patra said there are indications that inflation may be peaking. "As monetary policy works through into the economy...inflation is expected to fall back into the threshold in the fourth quarter of 2022-23 and fall even further in the next year. This is only the baseline scenario," he said, adding that because of initiatives taken so far, the inflation may fall "sooner and faster".

"Therefore, in this world of global inflation crisis, it is possibly better to look at the change in inflation, not the level," said the Deputy Governor, who looks after the monetary policy department in the RBI. He is also a member of the Monetary Policy Committee (MPC), which decides the key policy rate (repo). The government has tasked the RBI to ensure inflation remains at 4 per cent with a two per cent deviation on either side.

While the retail inflation based on Consumer Price Index (CPI) moderated to 7.04 per cent in May from 7.8 per cent in April, it remained above the RBI's threshold of 6 per cent for the fifth month in a row. "Against this backdrop, it is our hope that required monetary policy actions in India will be more moderate than elsewhere in the world and that we will be able to bring inflation back to target within a two-year time span. If the monsoon brings with it a more benign outlook on food prices, India would have tamed the inflation crisis even earlier," he said. Observing that the decline in inflation will be very "grudging", Patra said India will "succeed in bending down the future trajectory of inflation and thereby it will win the war".

Earlier this month, the Reserve Bank in its bi-monthly monetary policy review raised the benchmark repo rate -- at which it lends short-term money to banks -- by a sharp 0.50 per cent to 4.90 per cent to rein in spiralling prices. It followed an off-cycle meeting on May 4, when the central bank hiked the repo rate by 0.40 per cent. The RBI had also raised the inflation projection to 6.7 per cent for the current fiscal year from its earlier forecast of 5.7 per cent. The next meeting of the MPC is scheduled to take place during August 2-4, 2022.

ALSO READ | RBI Guv flags continued high inflation as 'a major concern': MPC minutes

ALSO READ | Mixed reaction to RBI article warning signs of stress due to high debt in several states

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