Mumbai: The Reserve Bank has no bias either to cut or hike the key rates and the direction of the monetary policy will be influenced entirely by data, Governor Raghuram Rajan said on . Rajan reiterated that subjective assessments and judgement of those forming the policies give the confidence that inflation will indeed cool down to 6 percent by January 2016.
The RBI governor, labelled as an ‘inflation warrior’ for keeping the rates high too long, had earlier said that the RBI is not desirous of keeping the rates high and wants inflation number to come down.
Consumer Price Index or retail inflation cooled down to 7.8 per cent in August, below the 8 percent target set for January 2015 as part of the RBI’s glide path.
“If the 2016 January inflation objective is under threat in any serious manner then we would look to tighten. The flip-side is that if inflation comes down earlier than that on a durable basis, then we would look to be more accommodative,” RBI Deputy Governor Urjit Patel, who heads the monetary policy department, said today.
He, however, said that a likely hike in interest rates by US Fed will not have any impact on RBI’s stance, asserting that it will be driven only by domestic situation.
“Our policy will be determined solely by reading our inflation data points and projections thereof,” he said.
With food inflation being a major worry fanning the retail inflation, Rajan said we should focus on other aspects like cold storage facilities, improving the logistics and finding newer market places for the produce to reduce the seasonal volatility in prices.
Meanwhile, on the corporates’ overseas debt, Rajan said that there was a need for companies to look at hedging from the financial perspective and hedges should not placed like bets assuming a single direction for the currency to move in.
