‘India cannot afford another wave of inflation’- RBI Governor

New Delhi| Reserve Bank of India (RBI) Governor Shaktikanta Das said India cannot afford another wave of inflation. The best way to do this at present would be to remain flexible. With the central bank’s target, we will have to wait for inflation to recover permanently.

Giving details of the Monetary Policy Committee (MPC) meeting held earlier in the month, Das said monetary policy can support sustainable growth only by maintaining price stability.

The Monetary Policy Committee (MPC) has decided to maintain the benchmark interest rate at 6.5 per cent, marking the tenth consecutive time that the MPC has not changed rates. However, the committee has changed its position from ‘withdrawal of adjustment’ to neutral.

According to details of the MPC meeting, Das said the Indian economy presents a picture of stability and strength, and the balance between inflation and growth is well established. Despite a near-term pick-up in inflation, the headline inflation outlook at the end of the year and early next year points to moving forward with the 4 percent target, he said.

A similar view was expressed by RBI Deputy Governor Michael Debabrata Patra. He had said that a gradual wait and assessment approach to remove policy restraint in terms of policy rate would be appropriate as long as inflation is not permanently close to its target. Therefore, he voted in the meeting to maintain status quo on the policy rate, but change the stance to neutral.