MUMBAI India's policy interest rate is appropriately set, said RBI Governor Raghuram Rajan, who has raised rates three times by a combined 75 basis points since September despite economic growth at a decade low.
"Rather than administer shock therapy to a weak economy, the RBI prefers to disinflate over time rather than abruptly, while being prepared to do what is necessary if the economy deviates from the projected inflation path," Rajan said in a speech on Wednesday.
Rajan warned against waiting to act until inflation expectations become entrenched, but also said the Reserve Bank of India would overlook temporary spikes in inflation.
"In other words, the monetary policy committee will not put on blinkers and see just the inflation number," he said.
(Reporting by Suvashree Dey Choudhury and Swati Bhat; Editing by Tony Munroe)
Trending On Reuters
Next year, Dr. Ketan Desai is slated to head the World Medical Association (WMA), guardian of the Hippocratic Oath. The WMA is standing by him, even as he battles conspiracy allegations in two Indian courts. Desai has been facing allegations that he conspired in 2009 to have the Medical Council recommend that a private medical college be allowed to add more students. Full article