RBI Governor Das Emphasizes Price Stability for Economic Growth
In his address at the 'High-Level Policy Conference of Central Banks of the Global South' on Thursday, Reserve Bank of India (RBI) Governor Shaktikanta Das highlighted the crucial role of price stability in sustaining economic growth.
Economic Planning and Development
Stressing the need for a balanced approach, RBI Governor Das said,
"Price stability is just as important as growth in enabling economic agents to plan ahead, reducing uncertainty and inflation risk premiums, and encouraging savings and investments, all of which boost the potential growth rate of the economy."
He further added that stable inflation, or price stability, is in the best interest of both the people and the economy.
Governor Das of the RBI Made Statement
"Price stability serves as the foundation for sustainable development. It increases the purchasing power of individuals and provides a stable environment for investment.
Das highlighted the delicate balance needed to manage inflation and growth, which has been complicated in recent years due to global crises including the COVID-19 pandemic, geopolitical tensions, supply chain disruptions and climate change.
Credit to Inflation Targeting (FIT) Framework
Reflecting on his visit to India during turbulent economic times, Das credited the flexible inflation targeting (FIT) framework for its important role in resolving the challenges posed by the pandemic and the Russia-Ukraine war.
This framework allows inflation targeting while adjusting growth objectives, ensuring that monetary policy remains prudent and accommodative.
Inflation eases after normalization
Das explained how the RBI prioritised growth during the pandemic by tolerating transient inflation spikes caused by supply chain disruptions.
"Our assessment is that these spikes were temporary, as inflation eased as supply chains normalised," he said. "
(Input From ANI)
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