India’s central bank to focus its energies on economic growth
February 24, 2022
The RBI has been criticized by several quarters, including economists, for not canceling its extraordinary monetary stimulus
India’s central bank wants to focus all its energies on reviving the country’s economic growth as inflation momentum falters, Michael Patra, deputy governor of the Reserve Bank of Indiasaid Wednesday.
Consumer prices rose 6.01% in January, from a revised 5.66% the previous month, boosted by rising costs for food, fuel and household items.
But the RBI’s Monetary Policy Committee (MPC) left the benchmark repo rate unchanged at 4.0%, sticking to its accommodative policy to help the economy recover from the pandemic.
“Our feeling is that headline inflation peaked in January and from now on will decline to reach the 4% target by the last quarter of 2022,” Patra said.
“And it has given us the space to keep policy rates low and persevere with an accommodative stance so we can focus all of our energies on accelerating and broadening the recovery,” Patra said. is expressed at the conference. Asian Economic Dialogue.
The RBI has been criticized by several quarters, including economists, for not undoing its extraordinary monetary stimulus despite inflation picking up towards the upper end of the RBI’s 2-6% target range.
Patra said he thought the view that the RBI was behind the withdrawal of monetary policy stimulus was unfair.
After India suffered the worst growth contractions globally in the initial phase of the pandemic, support for economic recovery was still warranted, he said.
Patra said India’s inflation “looks high only due to base effects” and is expected to decline soon, with monthly inflation dynamics clearly showing a downward trend.
He said the RBI had the leeway to support growth and would do so.
Patra also said India would likely take a different path from the rest of the world in terms of monetary policy and noted that the RBI deserved the right to choose its own time to normalize policy.
- Reuters, with additional editing by George Russell