Inflation Crossing RBI’s Band Target Of 6%

February 22, 2018

It is been warned by the central bank’s Monetary Policy Committee that there is possibility of inflation remaining above the target of 4 percent throughout 2018-19. The meeting was held on first week of February and this was concluded.

In the meeting, it was seen that the six members of the MPC, chaired by Reserve Bank of India Governor Urjit Patel, voted 5-1 in favour of keeping the policy rate on hold at 6.0 percent and retaining a “neutral” monetary policy stance.

However, Michael Patra voted for a 25 bps increase. He is RBI’s Executive Director and he stated that the target of 4 percent inflation is in danger of getting out of reach and over the next few months, the upper tolerance band is under threat.

The experts believe that this could seriously dent the credibility of the Committee’s commitment to the target. In the near term outlook inflation is likely to drift well above target.

On the other hand the Deputy Governor at RBI, Viral Acharya, also pointed out that the recovery is hopeful, while RBI growth projections for next year are in line with this buoyant activity of late.


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