Reserve Bank of India (RBI) Deputy Governor ,Michael DebabrataPatra wrote in the minutes of the August meeting of the monetary policy committee (MPC) that , technical considerations under the monetary policy framework have brought a halt in the policy.There is an ongoing debate on whether inflation-targeting should be the sole function of the next MPC amid the extraordinary growth induced by the Covid pandemic and it comes to an unfavorable stage as the first MPC comes to an end.
Patra wrote in the minutes, “…monetary policy is forced into a standstill even when there is space available to persevere with its commitment to reinvigorate growth momentum and alleviate the effects of Covid-19.
“In fact, if inflation persists above the upper tolerance band for one more quarter, monetary policy will be constrained by mandate to undertake remedial action, including an immediate and more than proportionate response to head off the build-up of inflation pressures and prevent it from getting generalised.”
The RBI governor Shri. Shaktikanta Das has also her expressed concern about the impact that inflation could have on the system of monetary policy hereafter.
Janet Elizabeth John @samacharline