RBI keeping ‘Arjun’s eye’ on inflation; India’s economy growing steadily despite headwinds, says RBI guv | The Financial Express

RBI keeping ‘Arjun’s eye’ on inflation; India’s economy growing steadily despite headwinds, says RBI guv

RBI Governor Shaktikanta Das on Wednesday said the global economy is going through a period of churning, He, however, expressed confidence in the Indian economy saying that private consumption, especially urban demand has been quite healthy.

RBI keeping ‘Arjun’s eye’ on inflation; India’s economy growing steadily despite headwinds, says RBI guv
In an uncertain environment, the Indian economy has been growing steadily drawing strength from its macroeconomic indicators, buffers: Shaktikanta Das (Picture Bloomberg)

RBI Governor Shaktikanta Das on Wednesday said the global economy is going through a period of churning, He, however, expressed confidence in the Indian economy saying that private consumption, especially urban demand has been quite healthy. “With monetary policy actions and stances undergoing a regime shift in advanced economies, financial conditions have tightened across markets and accentuated financial stability risks. In an uncertain environment, the Indian economy has been growing steadily drawing strength from its macroeconomic indicators, buffers,” Das said in his inaugural address at the FICCI Banking Conference-FIBAC 2022, adding that considerable improvement is seen in sales of white goods in the festive season.

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MPC resolution meant for the entire economy

Talking about inflation, Shaktikanta Das said that RBI’s constant endeavour is to keep “Arjun’s eye” on inflation. He noted that RBI is closely monitoring inflation trends, impact of previous actions. “In mine and the RBI’s view, price stability, sustained growth, and financial stability need not be mutually exclusive. There is lots of speculation about MPC’s November 3 meeting. We will prepare a report and send it to the government,” the RBI guv said. The MPC resolution is meant for the entire economy, he said. “Markets, citizens should know MPC’s decision. But letter to the government (after failure) is sent under law. I don’t have the privilege or authority or luxury to release it to the media before the addressee gets it,” Das added

In his address, the RBI chief clarified that the contents of the letter will not be under wraps forever. “It will be released at some point… The first right of receiving the letter lies with the government. Questions have been raised about the transparency of monetary policy after I said the report to the government is privileged communication. The entire monetary policy framework is based on strong principles of transparency,” he said.

RBI board reviews current economic situation ahead of MPC

Shaktikanta Das’ address comes at a time when RBI is scheduled to hold an off-cycle MPC meeting on 3 November. The meeting has been scheduled to decide on the content of the report that the RBI has to send to the government after it failed to maintain the consumer price index (CPI) inflation target within the 2-6% band for three consecutive quarters. Ahead of the MPC meeting, the Central Board of Directors of RBI met on Monday and reviewed the current economic situation. “The Board in its meeting reviewed the current economic situation, global and domestic challenges including the overall impact of current global geopolitical crises,” RBI said in a release.

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Pilot of wholesale digital rupee, a landmark moment

Meanwhile, Das also termed the pilot of wholesale CBDC (Central Bank Digital Currency) or digital rupee, a landmark moment in the history of money. “Yesterday, we launched the trial of the Central Bank Digital Currency (CBDC) project… It will be a landmark achievement as far as the functioning of the entire economy is concerned. Reserve Bank is among the very few central banks in the world which have taken this initiative,” he said. Wholesale CBDC is a major transformation in the way business is done, the way transactions are conducted, Das emphasised. The retail part of CBDC will be launched later this month, he added.  In his address, the RBI governor stated that RBI does not want to rush pilot of retail CBDC.

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First published on: 02-11-2022 at 11:57 IST