Shaktikanta Das : Atal Shaktikanta on the question of price rise –

This time: In the current scenario, there is no immediate need to change or reconsider the Reserve Bank of India’s (RBI) target of 4 percent (+/-2 percent) retail inflation. RBI Governor Shaktikanta Das said this on Friday. On this day Shaktikanta said, ‘I think there is no need to change the target now. It is still too late to move the goal post from one place to another. The target set to keep inflation at 4 per cent makes sense.’ As per rules, the central bank’s policymaking committee is mandated to keep retail inflation between 2 percent and 6 percent. Last year, the RBI hiked interest rates to over 2 percent to curb inflation in retail prices. Because, most of the last year, the rate of increase in the retail prices of products was above 6 percent. It has decreased slightly in the last two months.

Shaktikanta said, ‘Globally, price growth targets may be revised or reduced. But, now is not the time to change the target in India.’
He blamed the wholesale price of the product for this. In his words, ‘The wholesale price of the product is a matter of concern. This number is not at all comforting. RBI should continue to monitor wholesale price inflation gradually. Right now we should give more importance to wholesale price increase.’ Incidentally, retail price inflation in December fell to 5.72 percent from 5.88 percent in November, which is within the RBI’s comfort zone. However, wholesale price inflation was around 6.31 percent during the same period.

If the central bank does not take appropriate action, the rate hike may increase, Shaktikanta said. While keeping inflation in check may reduce the national growth rate, each central bank has to make decisions based on economic conditions, he said. The RBI Governor is also optimistic that borrowing by large companies in the country will increase in the coming days.

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