RBI monetary policy committee members agreed to prioritize focusing on inflation
The Reserve Bank of India (RBI) six member monetary policy committee while unanimously decided to keep the repurchase rate unchanged at 4% during its meeting held April 6-8 2022, also unanimously agreed to the fact that inflationary pressures need to be addressed.
According to the minutes of the committee meeting released by the central bank today, from Governor Shaktikanta Das and Deputy Governor Michael Patra to Chief Executive Officer Mridul Saggar and economist Ashima Goyal, all members present expressed concern about rising prices, making this an area of focus. .
Due to rising prices, the RBI has also raised its retail inflation target for the current financial year to 5.7% as global prices rise amid ongoing geopolitical tensions, even if expected. grain and pulse prices will fall. on good harvest prospects in winter.
Let’s take a look at some of the top quotes from monetary policy committee members on inflation during their deliberations during the meeting.
RBI Governor Shaktikanta Das:
While risks to domestic growth require continued accommodative monetary policy, inflationary pressures require monetary policy action. Situations warrant inflation prioritization and fixation of inflation expectations in the target sequence to protect macroeconomic and financial stability, while keeping an eye on the ongoing growth recovery.
RBI Deputy Governor Michael Patra:
Supply disruptions, soaring commodity prices and the ensuing financial market turmoil no longer speak to worries about the shape of future inflation – the worst fears have come true. Instead, they dim growth prospects. Macroeconomic conditions are the most difficult for developing countries, with severe shortages of essential goods even appearing alongside rising prices. On the one hand, the cost of foreign currency debt for EMEs is increasing, and on the other hand, they are forced to drain their currency reserves to increase the exchange rate. Higher commodity prices could also complicate the situation for governments trying to mitigate the impact of the pandemic by providing food and energy subsidies to households.
RBI CEO Mridul Saggar:
Potential risks have materialized the call for policy change. We are witnessing an entrenched conflict. While it remains unclear how long it could last, it seems likely that even if it de-escalates, supply chain disruptions and soaring energy, agricultural, mineral and metal prices could linger. at least one year.
Ashima Goyal:
The war in Ukraine has lasted for more than a month, uncertainties continue, oil prices fluctuate, supply disruptions will increase inflation but also reduce demand; The continued strong impact of Covid-19 in major countries will have similar effects. The typical household response to inflationary supply shocks is to reduce consumption. Furthermore, a falling wage rate will also reduce their demand.
Shashanka Bhide:
Even before the Russo-Ukrainian war, the monetary policy response to rising inflationary pressures in advanced countries began with policy rate hikes and measures to tighten liquidity conditions. easily created to manage the adverse impact of the Covid pandemic. The tightening of monetary policy in advanced countries is expected to continue to reduce the rate of inflation, but will also have a significant impact on trade and investment flows of developing countries.
