Former Deputy Governor of Reserve Bank of India (RBI), Viral Acharya said that the inflation rate is higher than expected and the Monetary Policy Committee (MPC) should focus on controlling prices in the policy review meeting next week. Acharya’s remarks come at a time when it is being said that even if the headline inflation has crossed the 6 per cent level in June, rates may be further cut to boost economic recovery. is. The inflation rate of six per cent is more than the comfortable position of RBI.
The RBI has set a target of keeping inflation at the level of four per cent in the medium term, although it has the potential to be two per cent lower. However, many analysts have predicted a 0.25 per cent reduction in the rate for economic growth, while some say that it may be due to inflation that the RBI may not make any changes.
“In my view, the MPC should think seriously that you have a statutory responsibility,” Acharya said during a talk organized by SPJIMR of the building. You have the responsibility of keeping the prime target rate of inflation (retail inflation) within the range of four per cent.
Growth dominates in recent decisions: Acharya
He said that growth has been dominating in the recent decisions, but that is only a secondary objective for the Monetary Policy Committee (MPC). He called it an agreement between the RBI and the government. He said, “You cannot change the primacy of your legal responsibility, which has been given to you.” You have to respect it. This is democratic accountability. ”He said that the current inflation rate is higher than most people expect.