RBI’s monetary policy committee members agreed upon prioritising focus on inflationReserve Bank of India’s (RBI) six-member monetary policy committee while unanimously deciding to maintain status quo on the repo rate at 4 per cent during its meeting held between April 6-8, 2022, was also unified in agreeing to the fact that inflationary pressures need to be reigned in.According to the minutes of the committee’s meeting released by the central bank today, right from Governor Shaktikanta Das and Deputy Governor Michael Patra to Executive Director Mridul Saggar and economist Ashima Goyal, all members expressed concern over rising prices, marking it as the key focus area.Owing to rising prices, the RBI has also raised the retail inflation target for the current financial year to 5.7 per cent on the back of rising global prices amidst the ongoing geo-political tensions, even as it expected the prices of cereals and pulses to soften on prospects of good winter crop harvest.Let us look at some of the top quotes from the monetary policy committee members on inflation during their deliberations in the meeting.RBI Governor Shaktikanta Das:While the risks to domestic growth call for continued accommodative monetary policy, inflationary pressures necessitate monetary policy action. The circumstances warrant prioritising inflation and anchoring of inflation expectations in the sequence of objectives to safeguard macroeconomic and financial stability, while being mindful of the ongoing growth recovery.RBI Deputy Governor Michael Patra:Supply disruptions, soaring commodity prices and ensuing financial market turbulence no more tell about fears of the shape of future inflation – the worst fears are already materialising. Instead they darken the outlook for growth. Macroeconomic conditions are the toughest for developing countries, with acute shortages of even essentials showing up alongside spiralling prices. On the one hand, the cost of foreign currency debt for EMEs is rising and on the other, they are forced to drain currency reserves in order to shore up exchange rates. Higher commodity prices could also complicate the situation for governments that have been striving to mitigate the impact of the pandemic by offering food and energy subsidies to households.RBI Executive Director Mridul Saggar: The contingent risk has materialised calling for policy shifts. We are witnessing an entrenched conflict. While it remains unclear how long it may last, it looks that even on its de-escalation, the supply chain disruption and elevated prices of energy, agro-products and minerals and metals may last for at least a year.Ashima Goyal:The Ukraine war has lasted more than a month, uncertainties continue, oil prices are volatile, supply disruptions will raise inflation but also reduce demand; the continued high impact of Covid-19 in major countries will have similar effects. The typical household response to inflationary supply shocks is to decrease consumption. Moreover, falling wage share will also decrease their demand.Shashanka Bhide:Even before the Russia-Ukraine war, the monetary policy response to the rising inflationary pressures in the advanced countries had begun with the increase in policy rates and measures to tighten the easy liquidity conditions created to manage the adverse impact of the Covid pandemic. The monetary policy tightening in the advanced countries is expected to continue in order to bring down the inflation rates, but it would also have a significant impact on trade and investment flows for the developing world.
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