• UGI USER
  • Apr 20, 2024
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RBI ASSERTS: NO EASING MONETARY STANCE DUE TO CURRENT CONDITIONS.

Why in the news?

RBI Deputy Governor stresses on maintaining restrictive monetary policy due to persisting inflation risks and uncertain economic conditions.

 About the Importance of Price Stability:

  • RBI Deputy Governor Michael Deba- brata Patra underscores the need to restore price stability for sustaining the economy’s growth trajectory.
  • He highlights that the current economic conditions do not support easing the restrictive monetary policy stance.
  • Recent inflation data and high-frequency indicators reveal elevated food inflation risks.
  • Patra notes a shift from a shallow winter trough to increasing price momentum with rising temperatures, potentially until May 2024.
Source:medium
What is Monetary policy?

  • Monetary policy: Central bank’s use of monetary tools for specified goals.
  • RBI’s aim: Price stability and growth promotion.
  • Price stability is crucial for sustainable growth.
  • Amended RBI Act sets an inflation target (4% +-2%) every five years, in consultation with the government.

About  the Monetary Policy Committee (MPC):

  • Origin: Established under Section 45ZB of the amended RBI Act, 1934, by the central government in 2016.
  • Objective: Determines policy rate to achieve inflation target.
  • Composition: Consists of 6 members, including RBI Governor, Deputy Governor, nominated Bank officer, and three government-appointed members with expertise in economics or banking.

 

Source: https://www.thehindu.com/business/Economy/conditions-not-yet-in-place-for-any-let-up-in-restrictive-monetary-stance/article68084640.ece#:~:text=%E2%80%9CHence%2C%20conditions%20are%20not%20yet,%2C%E2%80%9D%20Dr.%20Patra%20emphasised.