Synopsis: Governor of the Reserve Bank of India stated that RBI played a vital role in the government’s debt management, which helped speed up the transmission of the monetary policy during the pandemic time in the country.
Governor Das also stated that in the present quarter retail inflation is at its highest levels. It is influenced by supply factors and will moderate in the next quarter.
Monetization and direct financing by the RBI for the government’s fiscal deficit have many disadvantages, said the governor of RBI on Thursday.
The Governor also said that the creation of new money to help the financing of deficits was a form of economic reform. The Governor of the RBI stated that the RBI played a vital role in the government’s debt management which helped speed up the transmission of the monetary policy during the pandemic time in the country.
Das also denied the RBI’s sustained focus on yield-curve control was impacting its focus on inflation and repeated that it was only interested in an orderly evolution of the yield curve.
The Governor said that they were never focused that yield should always be 6% but he thinks that some of the actions taken by them made people get that impression.
Retail inflation did not rise as expected in June but managed to stay above the 2%-6% band. Two waves of Covid-19 have hit the economy hard, and the RBI will keep all the policies accommodated to support the economy in the long run.
Hasty or hurried actions will completely bury or pull down the whole economy when the revival has just started. Hence anything transitory in nature should be watched very carefully.
