RBI targets inflation rate long term
Posted on: 24/Sep/2015 12:10:06 PM
Experts feel that the RBI (Reserve Bank of India), under the leadership of its Governor Raghuram Rajan, will resist political pressure and remain focused on the inflation target of 4%. The government has been trying to speed up the sluggish recovery but the RBI is taking it slow. Say officials in the know, �The inflation outlook is still uncertain, and that is why the governor wants to be cautious. It makes sense to wait and watch how sustainable the fall in inflation will be.�
The officials have said that the RBI feels that any rise in food prices or crude oil may push up prices and expect further rises in the future. Mr. Rajan is also worried about the rate hikes that are expected in the US later this year, and its impact on India.
Says one expert, I think Governor Rajan is deliberately falling behind the curve... Rajan wants inflation to be low and stable for a sustainable period. You can be a proactive central bank only after anchoring inflation expectations.
An official from the government feels that even if the US does affect the economy globally, the Indian economy will hit the target inflation rate. Extra public spending would not be needed. Monetary policy will ease in line with ... inflation. We have had three cuts, the year is not over, so that still holds, he said.
