. Growth more crucial than inflation, RBI DG tells economists - Trade FX, CFD, Stocks, BTC, Indices, Gold & Oil - 1:1000 Leverage & Bonus - CSFX

Growth more crucial than inflation, RBI DG tells economists

Growth more crucial than inflation, RBI DG tells economists

NEW DELHI: Reserve Bank of India Deputy Governor Michael Patra met economists earlier this week and said concerns over growth take priority over inflation worries at the present juncture.

“The DG was very clear that growth is the larger picture at the moment, inflation is led by supply factors and the central bank cannot abruptly react to that,” a source present at the meeting said.

The Deputy Governor specifically addressed concerns about liquidity in the banking system.

Core liquidity, which is the sum of the liquidity in the banking system and the government’s cash balance, has ballooned past Rs 10 lakh crore at this juncture.

With Consumer Price Inflation currently more than 200 basis points above RBI’s medium-term target of 4%, such a surplus of liquidity can pose problems for the central bank.

However, Patra, the Deputy Governor in charge of Monetary Policy, assuaged worries about an abrupt withdrawal of liquidity.

“RBI’s biggest concern is growth. Yes, because of T-bill redemptions there will be an even bigger accretion to liquidity but inflation is not the mandate right now, it is growth,” another source said.

RBI will hold another meeting with a different batch of economists on Friday.

The central bank is conducting these meetings ahead of its monetary policy statement on August 6.

About Author

Related posts

S&P 500 Index Price Chart


S&P 500 increases as equities complete a turbulent, but positive first quarter Stocks increased on Friday as the stock gauge closed out a volatile, though profitable, a quarter that saw

Read More