I vote to remain accommodative while focusing on withdrawing accommodation to ensure future inflation remains on target while supporting growth: MPC Member
I vote to remain accommodative while focusing on withdrawing accommodation to ensure future inflation remains on target while supporting growth: MPC Member
Reserve Bank of India MPC member Jayanth R. Varma expressed his satisfaction that monetary policy is now heading towards “normalization”.
According to minutes of the latest Monetary Policy Committee meeting released by the RBI on Friday, Mr Varma, the only opponent of the accommodating stance, said: “I have been advocating the normalization of the policy corridor for several months and I welcome this action which is part of the MPC statement.”
“In terms of attitude, I think it’s absolutely appropriate that that word has been removed from the resolution,” he added.
“In the extremely uncertain situation prevailing today, it is very important for the MPC not to make any forecasts that would tie its hands,” he added.
“There is a need to communicate clearly that at future meetings the MPC feels completely free to take any action on policy rates that may be warranted based on the data that will become available in the coming weeks,” Prof Varma said.
“With inflation expected to exceed the upper tolerance limit for several months, it is imperative for the MPC to communicate its determination to ensure inflation stays within target going forward,” he said.
“It is also necessary to prepare markets for the post-pandemic monetary adjustment rollback. I am therefore voting to remain accommodative while focusing on unaccommodating to ensure future inflation remains on target while supporting growth,” he noted.
