RBI repo rate hike: Raghuram Rajan says RBI is 'anti-inflation'

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RBI wants to get inflation down to the stated 5 per cent-mark, Raghuram Rajan said without giving a deadline. IE Photo RBI wants to get inflation down to the stated 5 per cent-mark, Raghuram Rajan said without giving a deadline. IE Photo
SummaryNew RBI Guv Raghuram Rajan is following in the footsteps of his predecessor D Subbarao.

is going to come back and what we need to do is put our house in order before it comes back....of course we'd have to prepare once again but this time, we will be in a much better position, much stronger position and we won't have to worry that much," he said.

On other measures taken in the run up to the policy, the RBI chief said a lot has been made of the cash reserve ratio (CRR) move of asking banks to hold an average of 99 per cent balances, as they have held even 102 per cent in the past.

The decision to ask oil marketeers to come to the RBI for their dollar requirements is not a permanent measure and will be liberalised as stability returns in the market, Rajan said, refusing to be drawn into defining stability.

He rejected the criticism of ushering in 'capital controls' when the RBI reduced the amount of money an individual can take out and added that it will be liberalised once calm returns to the market.

"It was a precautionary measure and the next time the money starts flowing in again, we will liberalise."

Rajan said banks have attracted over USD 1.4 billion in deposits over the last fortnight and hoped current account deficit will be financed without drawing down too much from the forex reserves.

Asked if RBI will shift focus on the retail inflation numbers, Rajan said both retail as well as wholesale price indices are important and suggested to wait for the report of the Urijit Patel Committee on monetary policy.

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