Monetary policy should actively control inflation: Das

New Delhi. Reserve Bank of India Governor Shaktikanta Das on Friday stressed that monetary policy should actively curb inflation. He said that due to this, the decline in inflation from the highest level of 7.44 percent in July continued smoothly. Addressing the ‘Kautilya Economic Conclave 2023’, he said that price stability and financial stability complement each other and the RBI has tried to manage both efficiently.

Retail inflation fell to a three-month low of 5.02 per cent on an annual basis in September due to softening of vegetable and fuel prices. Inflation based on the Consumer Price Index (CPI) stood at 6.83 percent in August and 7.41 percent in September 2022. Inflation reached the highest level of 7.44 percent in July. To control inflation, the Reserve Bank has not increased the policy rate in February this year. Earlier, the repo rate was increased by 2.50 percent a total of six times since May last year. The Governor said, “We have maintained a hold on the policy rate. The 2.50 per cent increase so far is still working through the financial system…”

He said that the impact of monetary policy is becoming visible rapidly and effectively through digital payments. Das also stressed that monetary policy always remains challenging and there is no reason to be complacent. In his speech, the Governor said the global economy now faces three challenges: inflation, slow growth and risks to financial stability. With regard to the domestic financial sector, he said Indian banks will be able to maintain minimum capital requirements even during stress situations. Das said India is set to become the new engine of global growth and the country’s GDP growth rate is expected to be 6.5 percent in the current financial year ending March 2024.

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